- While not many technical details of China’s plans for its central bank digital currency (CBDC) are publicly available, the digital yuan is already raising concerns around privacy, national security and political power.
- The Digital Currency/Electronic Payment (DCEP) system would give the Chinese Communist Party the powerful ability to monitor in real time the minute financial dealings of its citizens.
- The U.S. needs to accelerate its development of tools for dealing with CBDCs on the global stage.
China is leading the world in the development and piloting of a Central Bank Digital Currency (CBDC). With that lead comes increased scrutiny and concerns over the downstream effects a digital yuan might have regarding privacy and political power.
A new report from the Center for New American Security (CNAS) not only lays out in stark terms the history and state of China’s CBDC system but also reviews what few technical details of it are available and recommends policy steps the U.S. should consider in an escalating CBDC conflict.
“This CBDC system, which the Chinese government calls Digital Currency/Electronic Payment (DCEP), will likely enable the Chinese Communist Party (CCP) to strengthen its digital authoritarianism domestically and export its influence and standard-setting abroad,” reads the report.
“By eliminating some of the previous constraints on government data collection of private citizens’ transactions, DCEP represents a significant risk to the long-held standards of financial privacy upheld in free societies.”
SOURCE Coin Desk
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