We shall be paying with QR codes for everything. Digital money is coming

A digital euro will be worth one euro. Nothing is going to change. The digital euro value shall be stable, unlike the price of Bitcoin which is now sustaining huge losses – says Richard Turin, the author of “Cashless. China’s Digital Currency Revolution”.

TVP WEEKLY: Will we go down in history as the last generation to use cash?

Getting rid of cash completely would be madness. Cash plays a key role during natural disasters for instance, when there is shortage of electric energy. A possibility to make cashless payments, to employ a Central Bank Digital Currency (CBDC – legal tender, issued in a digital form by state central banks) as the sole payment option should not preclude the retention and use of cash within the financial system. China is a perfect example of a country that inclines to this philosophy. Despite its progress towards a cashless state nobody in China is talking about withdrawing cash from circulation.

China outranked the US by a decade in terms of CBDC development. Why did it happen?

China started working on its CBDC in 2014 and the US – only in 2021. The development of payment platforms resulted from the China’s central bank’s decision of letting the big-tech companies Alibaba and Tencent enter the payment sphere. China resolved to use this solution because traditional banks had no possibility opening new branches, particularly in rural areas. Running Alipay And WeChat Pay took place to the detriment of state banks. Which was a bold and costly decision for the banks, one that is hardly to be expected from Western central banks or the Fed.

What is the mechanism of digital currencies?

CBDCs are not name or purchase lists controlled by the government. However, many people, especially those associated with crypto-currencies, are trying to scare others with the CBDC system. The claim the government will supervise money.

Will it not be so?

That is utter nonsense. A CBDC, as the name itself suggests, is issued and supported by a central bank. A digital euro will be worth one euro. Nothing is going to change. The digital euro value shall be stable, unlike the price of Bitcoin which is now sustaining huge losses.

CBDCs are no crypto-currencies but they use some similar technologies.

That’s why they owe crypto-currencies a debt of gratitude; however, digital money is state-controlled therefore many crypto-currency supporters do not approve of it. The society is becoming ever more digital so it needs digital money. The CBDC system is a natural link in the evolution of legal tender. Digital money is safe and convenient.

One of the main arguments against CBDC is that the government will spy on our purchases.

CBDC assures privacy. A European Central Bank publication suggests that the security standard of the digital euro will be higher than that of the credit cards we have been long using.

In “Cashless. China’s Digital Currency Revolution” you wrote that a fully explosive mixture of financial technologies, finance and government policy would soon explode in China, thus changing our world forever. How will “cashlessness” influence our everyday life?

Cashless life is very convenient. With the use of this method you can pay for everything, including more expensive things. You can transfer money at any time and without commission.

Shall we be paying with QR codes and phones for everything?

That’s possible. At Google Pay and Apple Pay one can make a purchase using the NFC technology. The solution works but is more costly than a QR code payment because a special device must be delivered to the vending point. In order to pay with a QR code it is well enough to print in on a sheet of paper. There is no need to spend money on any device. It’s one of the reasons why QR codes were so quickly adapted in China.
QR code payment with digital yuans in Beijing in 2020. Photo VCG / VCG via Getty Images
What impact will the cashless revolution have on human relations?

It already does. I can’t tell my wife I will pay this bill later on as the purchase is so simple and swift that I can’t justify not to make it at once. Since it facilitates the purchase it also allows you to split bills at restaurants and to avoid problems which occur when people say: “I’ll pay later” A social change will take place. Everything will accelerate even more. As the payment is instant it will accelerate refunds form shops or airlines. Retailers won’t be able to make excuses that we have to wait for the refund.

Will the digital yuan put an end to the dollar hegemony in the global finance system?

Over the forthcoming decade the digital yuan will help China reduce its dependence on the dollar in international trade. This digital currency will provide instant and free purchase to every buyer of Chinese goods. As of today such an operation lasts several days and is quite expensive. It will generate considerable savings to Chinese goods importers. The digital yuan will offer yet another major advantage.

Which is…?

The combination of digital payment and digital logistics will make the purchase of Chinese goods virtually from any place on Earth will be as easy as shopping on Amazon.

You argue in your book that using the digital yuan for cross-border settlements promises much more than a simple switch from the yuan to the dollar, yen or euro. It’s an entry ticket to a new integrated logistics system that world has not seen before. What does this mean in practice? In conjunction with innovative methods of surveillance won’t this make us witness the emergence of a terrifying world as described by Orwell in “Nineteen Eighty-four”?

No, by no means. The disinformation on CBDC is so great that I feel bad every time I hear about it. Digital currencies being created in the US and UE will probably secure our privacy better than credit credits we currently use. A digital currency will let us make smaller payments in complete privacy. In China the limit for private payments amounts to ca. 300 dollars. Surely, the police may ask the court and receive a warrant for collecting data on expenditures surpassing this quota but an identical legal system applies to withdrawals and payments made via bank and credit card.

What will happen if not every country is willing to pay China by means of the digital yuan?

Nothing. China will not force companies from other countries to use the digital yuan. Of course, they will be arguing that its use is quicker and cheaper, also in regard with digital logistics. But of companies prefer to go on using conventional payment methods, no one is going to make any obstacles for them.

Central banks should issue their own digital currencies so to replace the current bank system being vulnerable to crises and put crypto-currencies out of business – judges Nouriel Roubini, professor of economics at NY University. Won’t the ease of making digital currencies lead by accident to the creation of a global financial pyramid and a global financial crisis? Professor Rubini is a supporter of CBDC. In his opinion the benefits form digital money will result in people being less tempted to use crypto-currenices which he considers unsafe. The Chinese example shows the way CBDC will be issued in other countries.
China’s central bank acknowledges CBDC as cash. For every digital yuan having been issued an equal amount of cash is being withdrawn from circulation in order to prevent CBDC from causing inflation. Therefore the concerns you have mentioned are unfounded. By issuing treasury bonds governments can “print” more money in a second than they could ever print using CBDC! The concern that it is going to bring about printing too much money makes me laugh.

Is it possible to introduce one single digital currency for the whole world?

I don’t think I’s possible. After imposing sanctions on Russia countries use home currencies in trade transactions. As for now it would be difficult, if not impossible, to reach an agreement on common global currency. It would also be necessary to define which countries should be banned from the system. Sanctions gradually compel countries to find an alternative to the dollar. Which, by ten years will have probably taken the form of digital money.

-interviewed by Tomasz Plaskota
-translated by Tomasz Krzyżanowski

TVP WEEKLY. Editorial team and jornalists

Main photo: A digital "note" worth 200 yuans. Photo Costfoto / Future Publishing via Getty Images
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