Hong Kong could turn Covid Zero into money


Hong Kong is blocked. Without Beijing’s permission, the city cannot roll back its draconian anti-pandemic campaign, even if it’s a drag on the economy. The world outside of China has downgraded the disease to a more contagious flu. But even if Hong Kong has to stick to Covid Zero to keep its policies aligned with those of the mainland, a tech-savvy financial hub could surely do a better job, getting a head start on a new digital currency in the process ?

To that end, I propose turning the ubiquitous rapid antigen test, or RAT, into money. Proof of health, measured by a single red line on a small, thin plastic stick, claims an elevation to cash status. Yes, it’s a joke. But more than that, it’s a desperate plea for authorities to return Hong Kong to normal by scrapping polymerase chain reaction, or PCR, testing at government facilities and removing tracking bracelets, masks, surveillance orders and other irritants. It could perhaps even serve as a laboratory for mainland China, as President Xi Jinping seeks to move away from costly lockdowns and global isolation.

Here is the heart of my plan: A daily RAT result will replace the vaccination pass, currently the most crucial digital document in the Chinese Special Administrative Region. The pass displays a blue QR code on the smartphones of vaccinated residents over the age of five and visitors. The problem is that the pass does not work everywhere or for everyone. That’s not good enough for bars, which are raided for not asking customers to show RAT results that aren’t more than a day old. Schools want students and staff to be tested every morning.

The collar also militates against the opening, base of the success of the city. It is distressing for local visitors and travelers. Upon arrival in Hong Hong, the QR code automatically turns orange. It only turns blue again after three days, limiting movement. In addition, people coming from abroad must self-administer a RAT every day for a week and go to a community center for three more PCR tests in addition to the one they undergo after landing at the airport. Are you missing one? Pay a penalty of HK$10,000. Failure to comply with a mandatory test notice posted on the door of your building? Prepare to be fined again.

Coercion built into testing makes people hate it. That’s why it’s a perfect candidate to act as cash. More on that later. For now, let’s assume that the 7.3 million residents self-administer a mandatory RAT every morning. The result posted to a central repository should be verifiable so that John does not download Jane’s test or forward her negative result from the day before. It is analogous to money: no one can spend someone else’s purchasing power or double their own. Based on this, the government hands out, say, 40 Hong Kong dollars ($8) digitally to each person. (1)When people get on a bus, go to the school cafeteria or go to Starbucks, they can choose to pay with their e-HKD instead of Hong Kong dollars.

Hong Kong is separately considering a full-fledged central bank digital currency. By the time the monetary authority introduces it, users would be used to a prototype version, which will expire at midnight for the next 24-hour cycle to begin. The system would scan digital wallet balances in all residents’ exchange-traded fund accounts. However, during the day, people could exchange their e-HKD for cash, transfer it to a bank account, or send it to another person.

Currently, the places where people drop off their masks to eat, drink or get face-reading vaccinations go through a mobile app. They would continue to do so, but would now check to see if their maskless customers had received a new e-HKD that day. After verification, the merchant’s system would offer to accept e-HKD before proceeding with cash or card payment. Authorities who never really know what percentage of the population is infected – people have no incentive to report positive results – will have better data.

You may be wondering why I am advising Hong Kong’s freedom-loving society to institutionalize 24/7 state surveillance and deep intrusion into people’s daily lives. A simple answer is that the DNA of laissez-faire can now be lost forever. All an individual can expect from Covid Zero is that one day the populace will be allowed to ditch face coverings. It’s not even a goal post now.

A second objection may be technical: the government has committed more than HK$100 billion in consumer vouchers to help residents cope with the pandemic (HK$36 billion in the previous fiscal year and HK$66 billion this year). So what’s the problem ? In fact, e-HKD will offer three advantages over use-or-lose vouchers: First, it can be freely exchanged from person to person. Second, it can be saved in a bank account or an ETF. Finally, it will reuse the coercive aspect of Covid Zero by turning it into a boon.

According to the Chartalist theory of money, prosperous currencies arose in history when people stopped raiding each other’s livestock and crops and instead paid taxes to a central authority that had a monopoly on violence and could enforce the rules. The authority chose whether it wanted corn, gold or paper, and this forced people to work to obtain the goods. Proof of virus-freeness is also a tax. If, as a reward for paying it, the state allows me to meet other people without a mask, it gives me what must be the most valuable exchange in town today: smiling and seeing others smile. in return.

More from Bloomberg Opinion:

• Is the reopening of greater China Covid a myth or an obligation? : Shuli Ren

• My isolation fuels Hong Kong’s viral economy: Andy Mukherjee

• Masks Down, Singapore smiles again at high incomes: Daniel Moss

(1) Assuming that the test kit is made available free of charge.

This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.

Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services in Asia. Previously, he worked for Reuters, the Straits Times and Bloomberg News.

More stories like this are available at bloomberg.com/opinion

Previous Markets rally after Binance offers 'industry stimulus fund'
Next French is the language of human rights, not xenophobia