In its ambition to increasingly control the economy and the population, China is rolling out its central bank digital currency (CBDC), e-CNY. This initiative aims to gradually replace bills and coins in circulation with a digital currency, while enabling the Chinese government to increase its ability to monitor and control financial transactions.
Indeed, the use of CBDC facilitates the application of increased surveillance and repression practices on the Chinese population. With this new tool, the Chinese Communist Party hopes to reinforce its power and reframe the country's "undesirable" elements.
e-CNY, a threat to citizens' freedom and privacy
The introduction of e-CNY raises many questions about its impact on the privacy and individual freedom of Chinese citizens. In a context where the government is already exerting strong pressure on public opinion and severely restricting access to information, this new repressive feature of the digital currency is worrying many.
Transactions carried out with e-CNY will be traceable and consultable by the authorities, which could give rise to abuses of power and hinder citizens' freedom of expression and movement. What's more, the government could use this information to punish or reward individuals according to their economic behavior, thereby accentuating its control over society.
The privacy risks of CBDC
- Increased monitoring of financial transactions: The use of e-CNY will enable the Chinese government to track all transactions carried out by citizens in real time, making any suspicious or dissident transactions easy to spot.
- Tighter control over spending: The authorities will be able to monitor spending and money transfers remotely, and may even block certain transactions if they deem that they run counter to the interests of the Chinese Communist Party.
- Punishment or reward according to economic behavior: The government will be able to adjust interest or exchange rates according to the transactions made by citizens, penalizing those who support undesirable political or social causes and favoring those who comply with party directives.
China's role in the evolution of digital currencies
China is one of the first countries to take an interest in CBDCs and to carry out concrete experiments. Already the world leader in mobile payments, this step towards the complete digitization of money seems a natural one for the Asian country. Nevertheless, the stakes underlying this development are far from being purely economic.
In this way, China hopes to export its model and create an alternative to the US dollar on the international stage. The rapid adoption of e-CNY by other countries could strengthen China's position in international trade and support its hegemonic ambitions.
Potential consequences of widespread adoption of CBDCs
- Disruption of the global economic system: the introduction of a dominant digital currency could weaken or replace traditional currencies and disrupt economic regulation mechanisms.
- Political and geopolitical risks: the success of e-CNY could give China considerable power over other countries adopting the currency, paving the way for increased political and trade tensions.
- Widespread financial surveillance: If CBDCs become widely adopted, this could lead to the standardization of financial transaction surveillance, impacting the privacy of citizens worldwide.
The deployment of e-CNY and CBDC in China represents a further step towards totalitarian government control of society and the economy. While this innovation may offer advantages in terms of efficiency and modernization of the monetary system, it also raises major concerns about privacy and individual freedom.
Faced with these challenges, it is essential that other countries become aware of the risks associated with CBDCs and work to ensure a balance between economic benefits and the preservation of their citizens' fundamental rights.
