China gets ready for the digital currency as central bank pilots restriction on large cash transfers

• The PBOC outlines large cash transactions as aiders of tax evasion and criminal activities.
• The pilot exercise will be conducted in three provinces and will take two years to complete.

The Asian region economic giant, China is flexing its muscle for the digital currency currently in the testing and development stage. In preparation for the launch of the digital currency which is going to enjoy the central bank’s backing, the People’s Bank of China (PBOC) is piloting a restriction on large cash transfers.

According to Xinhuanet, a local news outlet, the central bank was going to carry out the pilot in three regions, the Hebei Province, Zhejiang Province and Shenzhen City. The pilot process is supposed to span a period of two years.

In its explanation, the PBOC reckons that large transactions are the conduit for criminal activities that aid in corruption, tax evasion and also money laundering. The restriction guidelines will not allow transaction above 500,000 yuan ($71,000) for businesses and 100,000 yuan ($14,000) to 300,000 ($43,000) for individuals account holders based the province. According to Changpeng Zhao, the CEO of Binance:

“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.”