Can cryptocurrencies or CBDC help?

The government of the Chinese province of Hubei, located at the epicenter of the COVID-19 outbreak (Coronavirus), issued a report on February 18 detailing the measures taken against the disease. Officials revealed they were tracking online and offline purchases of fever medicines to organize virus checkpoints.

As the emergency did not show any signs of slowing down, provincial officials took a series of measures to better control the outbreak. Pharmacies and medical institutions require IDs from those who buy fever medicines, probably to treat the virus.

In addition to the measures recently adopted, the government has begun an investigation to understand the full extent of the outbreak. As officials revealed:

“Since January 20, a comprehensive investigation has been conducted on patients with fever treated by various medical institutions and those who have purchased fever medicines and cough through physical or online stores. The information, including the time, name, citizenship number, current residential address and contact numbers of the patients mentioned above were taken. On-the-spot checks, follow-up tests, isolation and treatment were organized. “

Although no direct mention was made, it is assumed that the information was collected through Alipay and WeChat. These two companies are responsible for the majority of online purchases made through mobile payment systems in China.

Useless CBDCs?

China is noted for the high degree of digitalization of payments. The country has skipped credit and debit card payments to favor QR-based mobile applications.

The Chinese central bank (PBoC) is among the main promoters of CBDC (digital currency issued by a central bank) digital currency or “digital yuan”.

Analysts believe that such a CBDC would be used especially in the retail and procurement sector. This would replace WeChat and Alipay as payment mechanisms.

Extreme measures taken against Coronavirus seem to suggest that the government is perfectly capable of pursuing the acquisitions of its citizens. The introduction of CBDC seems to be useless from the perspective of financial monitoring.

This seems to confirm earlier statements by PBoC officials that focused on the geopolitical benefits of a digital yuan. Specifically, officials were concerned about the potential impact that Libra cryptocurrency could have on monetary policy. Digital currency would thus be a response to the influence that US monetary dominance has on China.

How useful would cryptocurrencies be?

The massive and individualized tracking initiated by Chinese officials for the Coronavirus outbreak is something that can only be done through centralized payment systems.

Although drug purchases in Bitcoin (BTC) would probably have avoided control in this case, transaction registration is completely open to the world. In the case of widespread adoption of cryptocurrencies, the government could still track payments by assigning identities to each wallet address.

While privacy coins like Monero (XMR) and Zcash (ZEC) might solve this problem, the issue remains complicated.