Since 12 February, we are in a new lunar year, the Year of the Ox, stubborn, hard-working, determined. Traditionally a time when families in China criss-cross the country to spend time together, there isn’t as much of that happening this year because of the risks of spreading Covid-19.
There’s not much travelling going on in Europe or the US either right now, as governments clamp down on the possibility of spreading the disease.
There’s one big difference between China and elsewhere, however. Even stay-at-home Chinese have been given free gifts in the “red packets” traditionally used for gift-giving. These packets come with a difference, however – instead of the usual cash they contain digital Chinese currency. Beijing and Suzhou each gave out 200,000 red packets containing Renmimbi 200 (about $31) via a public lottery.
This is not state philanthropy – it goes much deeper than that. The red packet gifts are a trial run for China’s imposition of a nationwide state-controlled digitalised currency. The Chinese payments system is already largely cash-free. This digital Renminbi is distributed directly to e-wallets of users by state-owned banks, setting up payments’ channels that circumvent private sector ones. As the digital Renminbi is legal tender, no merchant can refuse to accept it and thus they will be obliged to install e-Renminbi terminals and payments’ systems after the state digital currency is formally launched.
This is how I see cryptocurrencies being killed off by central banks and their governments. Central banks are going to encroach on private cryptocurrencies’ turf. When the digital dollar or digital pound is here (and they are coming) and are ‘legal tender’ then they will crowd out private payments’ systems. About 60% of more than 60 central banks surveyed by the Bank for International Settlements last year said they were “conducting experiments or proof-of-concept” studies on digital currencies. Where China goes – driven by a desire to supervise and control its population – it seems other countries will follow.
For me, this is an important reason why those of us who wish to truly democratise and control our own money ought to be thinking about gold for our payments. Gold is independent, has been used for payments for Millennia, and is universal. With Glint It! (the in-app P2P facility from Glint, currently available in the UK and Europe and coming soon to the US) you can send and receive gifts of real gold, digitally – even if you can’t travel right now there’s nothing to stop you sending a gift to someone else to remind them that you care.
Until next week.