China's Digital Currency Foray
Digital currencies like Bitcoin have been around for many years. But they’re all unofficial currencies, i.e., they’ve never been issued by any government. China has now initiated “large scale internal testing” of a digital wallet app, “moving a step closer to the official launch of the world's first sovereign digital currency”. I found this interview with Qu Qiang and Edgar Perez quite informative on the topic. First, what difference does make if a digital currency is government issued or something like Bitcoin? Well, for one, it becomes legal currency. Which means it can be used for everything, not limited to situations where the buyer and seller are willing to trade Bitcoins. Plus: “The money will be anchored to the nation's credibility.” Remember how Bitcoin exchange rate against physical currencies has fluctuated like crazy at times? That’s not a very attractive feature for any currency. Whereas a government would be incentivized to keep its own digital currency