The digital yuan has been specifically designed to facilitate “digital authoritarianism” through the automatic surveillance of all financial transactions in China, according to a new report.
“By eliminating some of the previous constraints on government data collection of private citizens’ transactions, DCEP [the digital yuan] represents a significant risk to the long-held standards of financial privacy upheld in free societies,” said the Center for a New American Security report, titled “China’s Digital Currency: Adding Financial Data to Digital Authoritarianism.”
The authors, Yaya Fanusie and Emily Jin, said Beijing is increasingly able to gather information about its consumers because of the growing popularity of digital payments, adding that the rollout of the digital yuan, which is currently being tested, will advance China’s geopolitical agenda.
“[It will] likely enable the Chinese Communist Party to strengthen its digital authoritarianism domestically and export its influence and standard-setting abroad,” the report said, stressing that the “move to a fully digital renminbi [yuan] is undeniably momentous” given that China has the world’s second-largest economy.
The surveillance of transactions “will arm China’s economic planners with a range of data that no other government has ever been able to efficiently assemble.”
CNAS advises the US government to work to “adapt to the quickly changing payments space, understand the geopolitical implications of this technology, influence its development, counter the DCEP’s threats to political and economic liberty, and ensure that financial technology innovation does not further China’s digital authoritarianism.”