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Date: Wed, 7 Mar 2007 00:28:29 -0500
To: Philodox Clips List
From: "R.A. Hettinga"
Subject: Beijing fears virtual money's influence
http://www.ft.com/cms/s/6e4d7c84-cc17-11db-a661-000b5df10621,dwp_uuid=9c3370...
The Financial Times
ASIA-PACIFIC
CHINA
Beijing fears virtual money's influence
By Mure Dickie in Beijing
Published: March 6 2007 19:32 | Last updated: March 7 2007 02:16
China has issued restrictions on the use of "virtual money" from internet
games, warning such currencies could threaten real-world financial
stability.
The ban on using virtual money to buy "material products" is part of a
wider tightening of controls that includes a renewed crackdown on the cafes
where many of China's estimated 137m internet users go online.
Beijing's move highlights the blurring boundaries between online and
offline worlds. Governments and judiciaries elsewhere are also struggling
to decide how to regulate online economies that have spawned multi-million
dollar businesses trading virtual items and currencies for hard cash. But
few view them as a threat to the world financial system.
The restrictions follow Beijing's growing concern about the influence of
currencies created by internet companies, particularly the wildly popular
"QQ Coins" issued by Hong Kong-listed messaging and games provider Tencent.
Tencent's messaging system is used by an estimated two-thirds of Chinese
internet users and its QQ Coins have been accepted as payment by other
companies as well as sold for legal tender.
A formal notice quietly issued to officials last month by the Communist
party and government departments, including the central bank, has ordered
"strict differentiation between virtual exchanges and online commerce in
material products".
The notice says: "The People's Bank of China will strengthen management of
the virtual currencies used in online games and will stay on the lookout
for any assault by such virtual currencies on the real economic and
financial order."
Virtual money can only be used to buy virtual products and services the
companies provide themselves, issuance will be limited, and users are
"strictly forbidden" from trading it into legal tender for a profit, says
the notice.
The curb on virtual money reflects concerns that it has been used to
circumvent China's strict laws against gambling.
Tencent and other internet companies offer forums where people can play
online versions of games such as mahjong using virtual money, although
Tencent says it has "adjusted" its services in recent months and that they
now "accord entirely with government instructions".
China is in the throes of a campaign to "purify" the internet, and most of
the content of the notice was aimed at tightening controls over the
country's estimated 113,000 internet cafes. It blamed internet cafes for
fostering "internet addiction", banned approval of new ones this year and
toughened penalties for those that admit minors. Crackdowns in 2002 and
2004 had a limited impact.
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R. A. Hettinga
The Internet Bearer Underwriting Corporation http://www.ibuc.com/
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'
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--
-----------------
R. A. Hettinga
The Internet Bearer Underwriting Corporation http://www.ibuc.com/
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'
