Two weeks ago, we reported that one of the most remarkable “features” of the brand new and soon to be unrolled digital Yuan, which should not be confused with any account-based currencies or commercial bank, private or unbackstopped digital currencies is that it will come with an expiration date. As the WSJ reported, “the money itself is programmable. Beijing has tested expiration dates to encourage users to spend it quickly, for times when the economy needs a jump start.”
That’s just the start.
While China’s digital yuan will have an uphill climb in seeking to dethrone the dollar as a global reserve currency – despite Beijing’s protests that it has no such ambitions – as it’s an electronic version of a currency nobody wants (for now), the new currency will allow Beijing to weaponize its currency response to its every growing roster of trade partners. As Bloomberg details, instead of challenging U.S. dollar dominance and neutralizing sanctions, “the digital yuan appears potentially more geopolitically significant as leverage over multinational companies and governments that want access to China’s 1.4 billion consumers. Since China has the ability to monitor transactions involving the digital currency, it may be easier to retaliate against anyone who rebuffs Beijing on sensitive issues like Taiwan, Xinjiang and Hong Kong.”
“If you think that the United States has a lot of power through our Treasury sanctions authorities, you ain’t seen nothing yet,” Matt Pottinger, former U.S. deputy national security adviser in the Trump administration, said last week at a hearing of the government-backed U.S.-China Economic and Security Review Commission. “That currency can be turned off like a light switch.”
Read More: China’s Digital Yuan Is Technocracy’s Dream Currency