As the People's Bank of China (PBOC) press ahead with preparations for its upcoming digital currency, the Renminbi token (RMB), local news sources claim a 2-year cash management trial is on the cards. Local news source Xinhuanet says that the PBOC plan on restricting large cash deposits or withdrawals for businesses from 500,000 yuan ($71,000) upwards with restrictions for personal accounts from 100,000 yuan ($14,000) to 300,000 yuan ($43,000).
These restrictions will be phased in over two years in the Hebei Province, Zhejiang Province and Shenzhen City; the PBOC seek to halt large cash transactions explaining that they often allow illegal acts including corruption, money laundering and tax evasion. Some observers claim the measures are in preparation to drive traffic from cash to the Renminbi token, but senior officials state that this is not the case. Head of digital research at the PBOC, Mu Changchun, reiterated that Beijing intends for the new currency to complement the traditional paper yuan.
Dragon CEO, Paul Moynan, is a keen observer of the Chinese market and has close ties with investors and key partners in mainland China said, “banks need to evolve to keep up with the changing needs of today’s customers, especially those prone to generating large-scale cash transactions. The PBOC want the RMB to have a global influence to compete with the US dollar, and the key to this may be blockchain technology which will create more freedom for RMB holders."
As it will be issued and controlled by the PBOC, it will definitely not be as decentralised as Dragon Coin or Bitcoin for example. The world is looking on as China leads the way with its national digital currency which just might be the best option for its people who want to reap the benefits of digital currency while having the reassuring presence of the central bank.
Although the details of the RMB are not entirely known to date, what is intriguing is whether it will be openly tradable outside of China. If that happens, we might be in for a global arms race as other countries try to catch up and of course, we'll be reporting on this and other great innovation coming out of China on the Dragon Blog.