When Satoshi Nakamoto introduced Bitcoin to the world in 2008, he or she or they (the mystery endures) pitched it as a way to end the power of central authorities in finance. Ten years on, the Chinese government is adapting the ideas behind Bitcoin to do the exact opposite.
The People’s Bank of China, the country’s central bank, plans to introduce a digital currency of its own. But unlike the decentralized blockchain-based offerings, this one could give Beijing more control over its financial system.
It would enhance the PBOC’s ability to root out risks and crack down on money laundering. It could also give the government an unprecedented window into individuals’ private lives.
The currency would initially replace cash, PBOC Deputy Governor Fan Yifei wrote in an article earlier this year.
According to patents registered by the central bank, consumers and businesses would download a mobile wallet and swap their yuan for the digital money, which they could use to make and receive payments. Crucially, the PBOC could also track every time money changes hands.