The People's Bank of China will pilot a restriction on large-scale cash transactions in three different regions, possibly paving the way for its upcoming digital currency.
The People's Bank of China (PBOC) announced that it will pilot a restriction on large-scale cash transactions in three different regions across the country, with one expert calling the move paving the way for its upcoming digital Renminbi token (RMB).
On Nov. 14, local news outlet Xinhuanet reported that the PBOC intends to carry out a large-scale cash management trial that will last for 2 years and will be implemented in phases in the Hebei Province, Zhejiang Province and Shenzhen City.
Guide customers to non-cash payment tools
The PBOC explained that large cash transactions facilitate illegal criminal activities that include corruption, tax evasion, and money laundering.&
The People's Bank will restrict large-amount cash deposits/withdrawals for business accounts from 500,000 yuan ($71,000) and up, while personal account restrictions will range from 100,000 yuan ($14,000) to 300,000 yuan ($43,000), depending on province.
The PBOC will also tighten its control of large-value cash transactions for specific industry sectors. It will take a closer look at the real estate industry in Xingtai City, the medical industry records of Qinhuangdao City, large-scale cash withdrawals, and automobile sales industries in Zhejiang Province. PBOC staff reportedly said:
“Under the requirements of large-scale cash management, banks need to deepen their understanding of current customers, strengthen risk warning and information communication for customers who are prone to generate large cash transactions, and guide them to use non-cash payment tools.”&
Setting the stage for the digital renminbi?
According to Dovey Wan, founding partner at global crypto asset holding company Primitive Ventures, the introduction of the restriction pilot paves the way for the upcoming digital Renminbi token (RMB).
Although details of this digital currency are not officially known, it will certainly not be as decentralized as Bitcoin (BTC) as it will be issued by the central bank. Binance CEO Changpeng Zhao, better known as CZ, who spoke at BlockShow Asia 2019, predicted that the digital RMB would be based on blockchain. He explained his reasoning:&
“The Chinese government wants to push RMB’s influence globally. They want RMB to be competitive with the US dollar. In order to do that they really need to push this currency to have more freedom.”
Not launching a war on cash
In an effort to quell rumors to the contrary, a senior official from the People’s Bank of China said that China is not launching a war on cash by introducing its own digital currency. Mu Changchun, head of the digital currency research institute at the PBOC, reiterated that Beijing intends for the new currency to complement the paper yuan.