by James Corbett
February 15, 2017
If you read these pages then you already know all about the war on cash that is being waged by central banks the world over. From Argentina to Zimbabwe and everywhere in between that dirty, rotten paper money (you know, that icky cash that people can use to exchange goods outside the purview of the government and other horrifying agorist ideas) has been under siege by governments and central banks.
In fact, you may have noticed that just in the past month the EU took another bold step in that direction with the European Commission announcing a new “roadmap” for “the fight against terrorism” that just happens to include “potential upper limits to cash payments.”
Heck, one of the keynote speeches at Davos this year was all about how the world needs to get rid of paper currency.
Perhaps sensing that its championship title for “most invasive nanny-state government” was on the line, the Chinese government has gone several steps further: Late last month China announced that the People’s Bank of China (PBOC) has successfully completed its digital currency trial run. China is ready to switch to a digital currency.
This is not a surprise to those who have been paying attention.
In 2014 the PBOC set up a special task force to investigate the possibility of issuing a sovereign digital currency. In 2015 they expanded that task force. In 2016 the PBOC convened a Digital Currency Symposium attended by “experts” from Citibank and Deloitte & Touche. They concluded that significant advancements in blockchain technology and other technical matters have made issuing a national digital currency possible for the first time.
According to China’s Caixin financial news service:
“According to sources from the PBOC, the central bank on Dec. 15 completed the trial in transactions and settlements of bank acceptance bills using a digital currency it developed, supported by blockchain technology – a secure digital ledger that records online transactions.
“The central bank’s digital acceptance exchange and currency system were put in place and connected for the test run with several commercial banks, including the Industrial and Commercial Bank of China, Bank of China and the private WeBank, the sources said.”
Their reasons for wanting to jump headfirst into a digital yuan? Why, to cut down on the cost of issuing paper currency, of course!…Oh, and there are a few other benefits, too, like “improv[ing] the convenience and transparency of economic transactions, reduc[ing] money laundering, tax evasion and other criminal acts, [and] enhanc[ing] the central bank’s control of over the money supply and currency circulation.” But mostly it’s about printing costs, honest!
Sarcasm aside, there is no great mystery as to why one of the world’s most controlling and oppressive governments wants to move to a purely digital currency. When the country is bleeding capital like there’s no tomorrow and spending unprecedented amounts of foreign exchange reserves to keep the currency propped up, all while trying to escape out from under the largest debt bubble in history, there’s quite an obvious benefit to having all money tracked, databased and controlled. With the flick of a switch, the PBOC will be able to control capital outflows, identify tax evaders, and punish anyone it doesn’t want transacting in society anymore.
And add this to the Chinese government’s nightmarish plan for a “social credit” system that assigns points for “good behavior” (and takes away points for “bad behavior”) and the future looks positively…well, Orwellian (there’s that word again).
Not to worry, the plan is to have both paper currency and digital currency in circulation….at first. One can imagine the paper currency being phased out as quickly as the public can be made to accept it, though.
And the rest of the world is not that far behind. They are going to be watching the PBOC’s grand experiment very carefully to see how the populace goes along with it, or what kind of resistance is offered. But one way or another, it looks like the “war on cash” is winding down for 1/7th of the world’s population, and the wrong side is winning. The rest of the world may not be far behind.
There’s still time to flip the script (or at least form your pocket of resistance), but the clock is definitely ticking.
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