Is China Becoming the Newest Front in the War on Cash?
Back in 2017, the IMF published a creepy paper offering governments suggestions on how to move toward a cashless society even in the face of strong public opposition. It hasn’t been in the news a whole lot lately, but the war on cash undoubtedly continues. In fact, the Chinese Communist Party (CCP) may be planning to embrace the idea as another weapon to wield against its people.
In August, the People’s Bank of China said it was close to launching a digital yuan. This could take the first step toward pushing China toward a cashless society.
Governments and central bankers in the West claim moving toward a cashless society will help prevent crime and will boost convenience for the average citizen. But the real motivation behind the war on cash is control over you. We got a first-hand look at what happens when governments restrict access to cash when India plunged into a cash crisis after the Indian government enacted a policy of demonetization in November 2016.
And as Tho Bishop pointed out in a recent article published on the Mises Wire, moving to a cashless society becomes a very effective way of tracking anybody who happens to find themselves in the government’s crosshairs.
We’ve seen policies pushing toward cashlessness in a number of Western countries over the last decade. The governments of Australia and Sweden have made a cashless society explicit policy goals. In May of 2016, the European Central bank announced it would stop producing and issuing 500-euro notes by the end of 2018. Not long before the EU announcement, a former Obama economic adviser/ex-Treasury secretary floated the idea of eliminating the $100 bill in the US.
Banks have also gotten in on the act. Chase capped ATM withdrawals for non-Chase customers at $1,000 per day, and ATMs in Mexico stopped issuing 500-peso notes, leaving the 200-peso note as the highest denomination available. CitiBank Australia stopped handling cash transactions altogether late last year.
But as Bishop points out, the international perspective of Western governments is quite different than that of China’s. The war on cash in the West is disturbing. In China, it’s downright horrifying, and we would be wise to sit up and pay attention.
For all of Sweden’s issues, there are no comparisons to the CCP’s brutal child policies or its treatment of religious minorities. What should be understood, however, is that a successful move to a cashless society would give the Swedish government similar tools over its population as those the Communist Party seeks over its dominion. While the former may ground their policy aims in ‘combating drug trafficking’ and ‘convenience,’ the end result in both cases is a new terrifying weapon in the hands of the state.”
One of the most desirable (from a government’s perspective) or terrifying (from the average citizen’s) features of a cashless society is the surveillance power it gives to government officials. If there is no cash, that means all transactions are digital. And that means they can be tracked. Think about the information that the government could gather on you if it could trace and track every financial transaction you make. Virtually nothing about your life would be hidden.
This may explain China’s increasing interest in developing a cryptocurrency. Some have speculated that this is another move to undermine the dollar. A digital yuan would make the currency easier to use worldwide and elevate the yuan on the world stage. But Bishop thinks there are other motives behind Chinese plans for its own cryptocurrency.
This is not a trump card to be used against Uncle Sam, but a new tool of CCP oppression against is own people. As noted by Jason Burack, a market analyst that has been closely following Chinese economic news, ‘throughout history, governments have always hijacked technology and used it for nefarious purposes.’
“At this point, the CCP successfully waging a War on Cash is mere speculation — though a recent move to allow tourists access to digital payment systems such as AliPay might help pave the way for that transition. It would be a policy change very much in character with the authoritarian regime in Beijing — and one that has long been sold as ‘benign’ by the more ‘liberal’ globalist elite.”
We should keep a close eye on developments in the war on cash in China. While it’s easy to dismiss it as something going on “over there,” it could end up having significant ramifications “over here.” Bad ideas that increase government control have a tendency to spread.