9 china's e-currency, global minimum tax

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big idea: china’s digital currency is taking off

1. china appears to be expanding its pilot of a government-run digital currency, called eCNY. first launched a year ago, 100,000 chinese citizens have been paying for their bubble tea with an app run by the central bank. instead of paying with cash yuans from their wallets, people pay with virtual yuans from their phones. one cash yuan is exactly equal to one virtual yuan in value, and theoretically could be exchanged.

2. china is the first major economic power to start such a currency, well ahead of rivals. the US has just done basic research and is years away from a pilot of this scale. 

3. arguably, china’s effort isn’t quite cryptocurrency - it doesn’t use blockchain for security and isn’t decentralized at all. every transaction goes through china’s central bank for verification. like cash, the eCNY essentially eliminates middlemen in financial transactions, like debit/credit card processors and private banks or credit unions.

4. there are some china-specific reasons for why they’re in such a rush to launch a virtual currency, but their pilot highlights a danger of such efforts. their central bank can track every single transaction through the eCNY app, a level of surveillance unparalleled in history. government digital currencies will be convenient, but cannot come at the cost of privacy.

story to watch: yellen for global minimum tax

1. treasury secretary Janet Yellen called for a corporate minimum tax rate among G-20 nations of 21%. Joe wants to raise the business tax rate to 28% in the US to fund his infrastructure plans (after He-Who-Must-Not-Be-Named cut it from 40% to 21%).

2. negotiations have been ongoing for years among the world’s biggest economies, but Janet coming out in favor of them are a big boost. countries have been engaged in a ‘race to the bottom’ for decades, trying to entice companies to pack up and move headquarters with lower tax rates. the only short-term beneficiaries to such schemes are the tax haven countries with the lowest rates - ireland has just a 12.5% business tax. where do you think those leprechauns get all their gold from?

3. we’ll see what happens here, but it’s unlikely countries will agree to a number as high as 21%. everyone’s finally realizing that cutting corporate taxes hurts everyone in the long-term as the tax base is eroded.

this week’s image: easter at the white house

• (The Atlantic) a bunny was caught attempting to impersonate the white house press secretary on easter monday. Joe apparently didn’t notice any difference.

this week’s number: 114% increase in michigan hospitalizations

Detroit Free Press

1. hospitalizations due to COVID-19 increased 114% compared to two weeks ago in michigan, leading the US in positive cases. while the vaccination campaign continues, we can’t let our guard down.

2. the jump is caused by a bunch of factors. youth sports linked to outbreaks have restarted in michigan; the state has the second highest per-capita rate of the highly-transmissible UK variant; indoor dining may have restarted too soon; michigan avoided relatively high infection rates earlier in the pandemic, resulting in a potentially lower level of herd immunity now; and the state vaccination rate is only 25th in the nation.

what we’re reading: “The Corporation”

1. a 240-page analysis of the power of corporations over governments, this book is a call to action at its heart. the author examines how the drive to increase profits, at any cost, has damaged society and democracy. it’s so well written we’re willing to overlook the fact that the author is canadian...

2. while some of the suggested solutions seem pie in the sky (like global regulations against multinational companies), his diagnosis of the problem is spot on. for too long, corporations have acted with impunity in their pathological pursuit of shareholder value.

and, in case you missed it:

• things seem to be calming down in jordan after what is being described as a coup attempt occurred late last week. saudi & israel have been linked to the plotters.

• physicists may or may not have discovered something which may or may not alter our understanding of the universe. schrödinger's cat is also laughing at us.

• it was a good week for monkeys, with five apparently on the loose in cincinnati, and two dozen escaping from a german zoo. 

the weekly rundown is produced by Yunus, Faisal (@faisalc93), and Ahmed (@ahmedhcheema). learn more about us and email us your comments and feedback!