by Peter C. Earle
The American Institute for Economic Research
Earlier this year, China began to roll out a project that had long been in the works––a digital version of its currency, the yuan, is now being used in four Chinese cities. The Chinese government sees two major potential benefits to the experiment: a tangible challenge to the U.S. dollar’s global ubiquity, and a way to control how Chinese citizens spend their money.
As a government-issued currency, the digital yuan can be manipulated and monitored in a number of ways. Importantly, it is programmable. Writes The Wall Street Journal, “Beijing has tested expiration dates to encourage users to spend it quickly, for times when the economy needs a jump start.”