CBDC could give China "enormous power"

China could significantly increase its leverage in the region with e-CNY, says an Australian Senator. The Chinese CBDC is considered the most advanced project in its category.

The digital renminbi (aka digital yuan) may pose a threat to Australian national security, says Andrew Bragg, an Australian Senator and a member of several committees related to finance and technology. Speaking on ABC radio, the politician warned that the Chinese central bank digital currency (CBDC), "if it became widespread in the Pacific, or even within Australia, would give the Chinese state enormous power – economic and strategic power that it doesn't have today." CBDCs have long been deemed a threat to democratic freedoms, especially in the hands of quasi-totalitarian governments such as the Chinese.

Bragg also announced his plans to propose regulations that would make it possible to monitor Chinese banking operations and the use of e-CNY in Australia. The politician stressed that his country needs to "know more about this digital currency, so the bill establishes reporting requirements in that regard."

e-CNY, a digital currency issued by the People's Bank of China, has been in trials since 2014, and as of April 2021, it has been undergoing public testing. In August this year, several Chinese cities launched e-CNY-based payments in some areas of their public transport systems. For example, in Guangzhou, the new method has been implemented in over ten city bus lines, as well as on sightseeing buses, while in Ningbo the new system covers all the subway lines.

Chinese authorities have also resorted to giveaways to promote the use of the digital renminbi. In May, Hong Kong's neighbor Shenzhen, announced an airdrop of 30 million e-CNY through a lottery. The goal is to stimulate the local economy and – perhaps less officially – motivate residents to embrace the new government-controlled payment method.

Today, the Chinese central bank has disclosed plans to extend the CBDC trial to four major provinces.