China’s digital currency aspirations are unprecedented and unparalleled. The first because not many critics pinned their hopes that the Far East giant will be the beacon holder for blockchain technology. The second since no other nation is close to China’s progress in terms of digital currency development.
However, the advancement of disruptive technology is not China’s reason to spearhead the development of the digital currency, if recent developments are considered. Instead, the Eastern superpower wants to leverage blockchain to gain a higher position on financial transactions and activities of its citizens, an ideology completely contrary to that of Bitcoin.
Nikkei Asia investigated that the nation will presently follow every large exchange over RMB 100,000 (or $14,000 at current rates) to check capital flight and intently screen misrepresentation. Beginning in July, banks in China’s Hubei area will record sequential numbers for all money exchanges over the 100,000-yuan edge; and announcing gross figures to the People’s Bank of China (PBoC).
ALSO READ: How Can Indian Hardware Startups Grow In-Tune with Software Startups?
Ultimately, the digital yuan will be deployed to provide real-time information and transactions to Chinese regulators, with the ultimate motive to eradicate currency fraud in the country. No exact date for launch exists, reports suggest President Xi Jinping is driving the launch of Digital Yuan ahead of the 2022 Winter Olympics in Beijing.
The government has been cracking down on people trying to smuggle yuan out of the mainland to acquire Hong Kong or US dollars. Beijing hopes to establish a comprehensive monitoring regime that will help prevent capital outflows. Another factor is the current trade between the United States and China, which has affected the stock markets of both nations and, to some extent, also their fiat. Nikkei notes:
“China’s foreign reserves exceed $ 3 trillion, the figure is lower when you consider the increase in dollar-denominated debt, as well as the US government bonds that can be quickly liquidated.”
Capital outflows have, historically, led to the dumping of the yuan. This weakens the Chinese currency and squeezes its foreign currency reserves.
ALSO READ: Blockchain May Just Be the Solution to Asian Issues of Financial Inclusion
Get the latest in Asian Bitcoin news here at Coin News Asia.