So, the People’s Bank of China (PBOC) just announced a new pilot program in three provinces aimed at putting a cap on unregistered cash transactions. This is part of their push towards introducing a fully digital national currency.
I saw this reported first by Xinhua, but it lit up Twitter thanks to crypto influencer Dovey Wan (@DoveyWan).
If you want to dig into the full article, just click here.
Someone correct me if I’m wrong, but Australia is also trying to put limits on cash transactions, and citizens are already protesting it. For China, they’re going to limit unregistered cash transactions in those three provinces as they prep to roll out their national digital currency.
I’ve got a friend in Malta too, and she’s facing issues withdrawing cash from banks because of those limits.
So here’s my question for you all, especially those in the mentioned provinces in China. What do you think about this? Are you on board with it or not?
Centralized currencies are super easy for governments to monitor and control. But with decentralized options, those unregistered cash transactions can’t really be stopped by the People’s Bank of China.
All governments have liquidity reduction plans, which may be digital or conventional methods.
Some countries resort to tracking transactions in some banks and issue reports for it and then use those reports to develop policies that limit liquidity.
The above plan aims to reduce unregistered or illegal currencies.
If the Chinese government issues a cryptocurrency "Digital coins," it will be centralized, state-controlled and manageable.
Governments can limit or try to centralize cryptocurrencies but need a lot of effort.
Digital transactions increase transaction efficiency, but also increase traceability and carry a larger systemic risk. People should be cautious in terms of what extent of support they show to a cashless society. Central banks can already print money on demand, if there isn't even cash then there's nothing to hold them back from taking the largest part of society down with them if the situation calls for such.
"Unregistered cash transaction" they made normal cash transaction sound something illegal where in the past year everything seems normal about it. Just when I thought that nothing could be worst than what India is trying to do with their own digitalized version of Rupiah then China finds a more clever way onto introducing their state-owned crypto to their citizens. It's like nothing has change where one country tries to take advantage of the situation and they only want is for them to have one option only. I just hope that the people will be wiser and still take the crypto route rather than their state owned crypto.
I am not from China but I am sure that people in there will have no choice but to follow what the government is saying and implementing. Right now, there seems to be a trend of controlling cash inflow and outflow. You are also talking about Australia but I remember that Malaysia is also devising a similar system. Frankly, I am not yet sure what are the motives of this movement, maybe to control the liquidity of the market which they can think can be a big boost to the economy.
Of course, with this scenario, there will be many people who can be enticed to do the alternative which is cryptocurrency though the problem for now is that we can't rely on so much with cryptocurrency to function like the fiat currency as not all fiat merchants are also in here. Maybe the question is if this trend can be affecting positively the cryptocurrency industry. That can be too early to conclude with, maybe we should wait what are the implications of this money control.
If you're surprised about this in any shape of form then you are seriously out of the loop.
There's a reason why the PBC is currently pushing crypto education, and that is to set up their own token that may be coming in the near future. There has also been a recent trend in more acceptance in Wechat and Alipay to the point where cash is not even used anymore.
Removing cash altogether seems to be the most logical next step to take, and this is exactly what is reflected here (supposedly).
this seems to be happening all over the world as governments hedge against future liquidity crises.
it goes hand in hand with their plans to launch a central bank coin too. prevent capital flight via cash and drive the population towards a surveillance-friendly digital currency---two birds with one stone!
Most likely the latter, to "prevent capital flight" although it could hit two birds with on stone, it could also trigger panic in those three provinces. But we all know that Chinese government wanted strict control of their population so I'm not surprised by this move. And maybe this could be the effect of trade wars, but I doubt it at this point. But Bitcoin will come to the rescue, and the government as pushing Chinese people to hedge and put their wealth in Bitcoin, just saying because of this restrictions.
Limiting cash transactions is happening all over the world. Aside from the fact that cash transactions cannot be traced which makes the work of authorities difficult in case its being used to finance illegal activities, the cost of maintaining it is also on the high side. For instance the reprinting of notes that are outdated, the cost of maintaining security, the cost of moving cash from one location to another, the cost of administration and approval for the movement among other cost. What they should have done in those countries in my opinion, is to discourage the use of cash rather than limiting it. In the sense that, if you will be withdrawing beyond certain threshold, then you need to pay a percentage as charges to the state with that everyone knows and can plan along that new rule.
Has the Chinese government been going to significantly reduce the circulation of cash in the country? Recently they warned that refusing to use cash is illegal and that cash circulation increases economic growth. Of course, the situation with the issue of China's national stable coin may make the government look at it from a different angle. However, I think that there should be a certain balance between the amount of cash and non-cash money. These are just experiments so far.
No one who's given it a few seconds of thought should agree with it but it looks like hundreds of millions of Chinese folks have voluntarily gone cashless so won't care. I wonder if these provinces are rural or urban. If rural that could be a major pain.
Where I'm at cashlessness would be hopeless. 80% of my locality has no mobile signal. Paying with a card is often an adventure and just as often a complete no go as many of them are mobile signal only.
It also means I often can't do 2FA so getting into Paypal can be impossible and banks are now attempting to make every online card transaction the same. I'll have to leave my phone at the top of a building with a lightning rod poking into it.
They're introducing transaction limits, not bans on cash altogether, and it means there's just more paperwork if someone has to go over the limit. A lot of people start using wechat and alipay voluntarily anyway out of convenience (although I'm sure there's some behind the scenes influence from the Chinese government themselves to push people into using these apps).
Note that these are 2 totally distinct subjects.
Limiting cash transactions, which is happening nearly everywhere.
Launching a national digital currency.
Both give us every reason to be enthusiastic about BTC.
I'm sure that someone in the Chinese government will stand to benefit with this cash limits in the future and I don't think it's all abouy corruption since just by the thought alone on having a more digitalized mode of transaction you know it will be much more easier for them to access and know all of our transactions. The government might be going digital because of this where they want to monitor everything and they don't want their citizens to be messing around with regards to their taxes and doing illicit activities at least by going digital they will easily see what's going on in everything they have access too.
It's that, and probably also making it harder to avoid capital controls; due to lack of rule of law, Chinese themselves don't feel like their country is the safest place to store their wealth so a lot of them try to keep as much as they can abroad.
I accept majority of the things you say, but the problem with the decentralized currency is that if a government stands tall against it then you cannot find a merchant accepting it and if you are not able to spend that currency then what is the point in having those. You cannot bypass the limit in cash transaction if BTCitcoin is not accepted and all the theory you said fails terribly.