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Rich Turrin on EUs digital euro vision, U.S. eCash and China’s e-CNY + Shanghai Lockdown

Rich Turrin | Cashless | Apr 1, 2022

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The EU's vision for a digital euro takes shape while the US looks at eCash

First, let me congratulate the EU for actually surveying citizens to get an idea of their concerns for the digital euro. The Fed should watch and learn from the European Central Bank (ECB)!

The most shocking thing we learned is that privacy is, amazingly enough, not "top of mind" for most users, many of whom feel that much of their purchasing is already tracked. That was a real shocker for me and apparently for the ECB. Still, it shows the sad state of digital privacy.

Interestingly, free and immediate contactless payment seemed to be a hit, provided it was universal. Users don't want to worry about whether or not it would be accepted. They have had their fill of being told: "Sorry, we accept Visa, not Mastercard." The good news is that universal acceptance is precisely the experience a CBDC national currency can deliver.  More on the ECB digital euro user survey

See:  Will The ECASH Act be the Answer to Privacy and Virtual Currency in the U.S.?

What makes this so interesting is that in the same week that the EU launched these results, US Senators from the Financial Services Committee published a draft law proposing privacy-protecting eCash!

ECash is tokenized money that does not get transported on a network. It is not a CBDC! ECash is a token on your phone or offline card and can be used as we do cash with no risk of being tracked. I think it's a great idea and may just compliment a CBDC. CBDCs would cover higher value transactions and eCash lower day-to-day expenses. This looks almost exactly like the e-CNY's anonymous payment for low value (RMB 2000 max) transactions.

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eCash is designed for privacy. Lack of AML/KYC is its "Achilles heel."

eCash is not without flaws. Suppose you lose your digital wallet; it's gone, just like cash. The biggest issue is that eCash requires no KYC or AML. I don't see this as a flaw, in fact, I love it! Still, I am sure this will cause a battle with regulators who will deem eCash unacceptable. Still, I think it advances the digital dollar discussion.  More about the eCash act and PDF of the full act in this post here.

Fintech Fridays Podcast:  Special guest, Richard Turrin, Author of Innovation Lab Excellence

What makes this so interesting is that the US is investigating a privacy-protecting eCash system, while the ECB is getting actual survey results saying that privacy is not the number one concern. I find the divergence interesting. It makes me wonder if the nation addicted to privacy vampire Facebook is as concerned about privacy as a vocal minority makes them out to be? In the EU, we now know that this is not a primary concern. Sadly, for the US, we have no idea.

The Digital Yuan is used for far more than buying coffee and has potential for reserve currency

I back this statement up with a post earlier in the week that shows how the e-CNY is being used for transactions over US$ 100,000 in trials in China. The PBOC is clearly signaling that e-CNY will be used to carry large sums of money that WeChat and Alipay were never designed to move. Moreover, it proves that the e-CNY can do far more than buy coffee.

Rich Turrin at FFCON20:  AI Implementation in China: A Day in the Life in Shanghai

This is a big question but has to be asked. While the yuan certainly has many flaws, is it "good enough?" The US dollar was once considered "risk-free," but it now has real questions surrounding its usability following widespread global sanctions. Can you use it if sanctions hit? This is why as a "risk management exercise," many nations are looking for dollar replacements, and the yuan just might be "good enough." It's not a question of loving the yuan, so much as that there are few alternatives, and most countries import goods from China. So why wouldn't they convert some of these purchases to yuan to reduce dollar dependence?

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