The People’s Bank of China yesterday announced intentions to start a pilot to limit the amount of cash in its economy, a precursor to its ambition to make its currency digital and an attempt to combat money laundering.
According to state-run news agency Xinhua, the pilot, which will last for two years, will limit the cash flow in the provinces of Hebei, Zhejiang, and Shenzhen.
Public accounts must register any deposits and withdrawals over 500,000 yuan, or around $71,000. Limits on personal accounts range from 100,000 yuan ($14,200) in Hebei Province, 300,000 yuan ($42,000) in Zhejiang Province, and 200,000 yuan ($28,000) in Shenzhen.
“Under the requirements of large-scale cash management, banks need to deepen their understanding of current customers [and] strengthen risk assessments… for customers who are prone to generate large cash transactions, and encourage them to use non-cash payment tools,” a representative from the bank told reporters.
Xinhua said that the pilot will “will gradually establish and standardize large-value cash withdrawal appointments, large-value access registration, large-value cash analysis reports, supervision and inspection systems.”
Xinhua said that the pilot will help “to prevent illegal criminal activities such as corruption, tax evasion, and money laundering, and contain certain risks.”
However, crypto analyst Dovey Wan tweeted that “banks are already pretty good in dealing with money laundering (enough surveillance in place if they really want to act on it).” and that “the whole financial system is largely cashless already.”
Instead, “All the dots are now connected for upcoming Digital RMB too,” she tweeted. Plans for China’s digital currency are proceeding apace, with the People’s Bank of China’s Digital Currency Research Institute hiring experts to work on its Digital Currency Electronic Payment (DCEP) project and this month inking a deal with tech giant Huawei.
And just this week, the official newspaper of China’s People Liberation Army suggested that soldiers serving in the country’s military be rewarded in crypto, should the country’s plans for blockchain technology take off.