In China they have a lot of "virtual" money. Consumers play online games and win the ethereal dough. But, it can be used to buy real stuff in the real world.
So, the Chinese government is going to internet cafes in the hope of getting the portion of the country’s 137 million internet users involved in using online virtual money to stop.
According to the FT.com, the Chinese government made the following proclamation: “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.”
The trouble with this is that the Chinese government has not had much success with curbing bad behavior beyond running people over with tanks in Tiananmen Square. The central authorities have not been able to cut down on intellectual property theft or people who want to have more than one child.
Virtual currency could be a real threat to the Chinese economy. An underground that can buy goods and services without using government issued green backs risks an imbalance between the actual costs of things and whether they are paid for with phantom money. It puts supply and demand on its head.
But, the Chinese could always use their virtual money to buy stock on the Hang Seng or Shanghai markets. As if they are not unstable enough already.
Douglas A. McIntyre can be reached at [email protected].
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