BY BRITT GILLETTE
As the coronavirus swept across China in early 2020, several news outlets posted stories about the Chinese government laundering money - not in a traditional sense, but in a literal sense. With so many people touching paper currency, China cleaned and disinfected vast amounts.
In other parts of the world, where governments haven't taken similar measures, many are making a personal choice to avoid paper currency because they're afraid of contracting the coronavirus. This fear of virus-tainted paper money is only the latest event driving the world toward an all-digital financial system.
In late March, as state lockdowns led to a massive increase in unemployment claims, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (known as the CARES Act for short). One of the highlights of the bill was a one-time $1,200 payment to most people over age 18 (with additional $500 payments for children).
Believing these payments would "stimulate" an economy in freefall, Congress sought to get cash in the hands of workers as soon as possible. But two weeks after Congress passed the CARES Act, few people had received their stimulus payments.
Even now, some people still haven't, and critics have attacked the government for its slow, bureaucratic response. With millions struggling to pay their bills, many believe a U.S. government-backed cryptocurrency could have delivered the payments faster.
So what do virus-tainted paper currency and slow economic relief payments have in common? Both have led to a more aggressive push to create national digital currencies. Supporters (mostly government insiders) believe government-sponsored cryptocurrencies will offer greater benefits than the current paper currency system. But government-sponsored cryptocurrencies also create an unprecedented opportunity for government abuse.
Adversaries of the United States view state-controlled cryptocurrency as a way to counter U.S. dollar dominance and a way to avoid sanctions. They also see it as a way to counteract the rise of Bitcoin and other private cryptocurrencies they can't monitor or control. It's no coincidence the nations most interested in launching state-sponsored cryptocurrencies are some of the world's most brutal regimes.
Need an example? Last month, Wang Zhenying, president of the Shanghai Gold Exchange, called for a new "super-sovereign currency system" to rival the U.S. dollar. Wang said no country should have the ability "to freeze the international assets of another country."
What Wang really means is the United States shouldn't have that ability. I doubt he would protest if China had such power. After all, China is seeking that power by rolling out plans for its own cryptocurrency. No doubt, they hope it become a rival to the U.S. dollar.
China is currently testing a state-sponsored cryptocurrency through internal pilot tests in four different Chinese cities. Known as the DCEP (Digital Currency Electronic Payment), current expectations are for a late 2020 rollout to the general public. The aim is to eliminate the use of Chinese paper currency and replace it with the new Chinese cryptocurrency, giving China insight into every transaction DCEP is involved in - whether or not the transaction in question takes place in China.
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