Trans-Pacific View author Mercy Kuo regularly engages subject-matter experts, policy practitioners, and strategic thinkers across the globe for their diverse insights into U.S. Asia policy. This conversation with Emily Jin – research assistant at the Center for New American Security and co-author of “China’s Digital Currency: Adding Financial Data to Digital Authoritarianism” (CNAS 2021) – is the 265th in “The Trans-Pacific View Insight Series.”
Briefly explain the financial function of China’s Digital Currency / Electronic Payment (DCEP).
China’s DCEP, or more commonly referred to is the digital RMB, keeps near real-time transaction data of all individuals and entities using the currency. This gives China’s central monetary authority considerable access to its public. The DCEP would disrupt intermediary links in China’s currency operations and allow the PBOC to directly reach the end users of the digital RMB. With current public information, we understand that the PBOC will occupy the back end of the two-tier DCEP system, while state banks and some technology firms build out the front-end such as distribution channels and payment interfaces.
How are the Chinese Communist Party (CCP) and People’s Bank of China (PBOC) using DCEP to fuel China’s geopolitical ambitions?
U.S.-China increasingly competes in two domains: economics and technology. Successfully implementation and scaling up the DCEP (within China and eventually beyond its borders) would empower China to potentially rewrite international norms, values, and ethics in financial technology. As innovative technology has potential to disrupt global finance – an intricate ecosystem of institutions and legal frameworks that facilitate international flows of financial capital – an authoritarian shift in standards could just lead to a sea change in international finance.
Read more: https://thediplomat.com/2021/03/chinas-digital-currency-implications-for-the-us/
