China wants to track all citizens’ transactions and financial activities with the digital yuan

In 2020 alone, capital outflows from China via bank transfers and other channels exceeded $30 billion in the January-March period. While the question of capital flight being controlled by issuing a digital yuan is debatable, one thing’s evident, China is not looking to embrace the decentralized ethos of cryptocurrencies any time soon.

China’s digital currency aspirations are both unprecedented and unparalleled. The former because not many critics pinned their hopes on the Far Eastern giant to be the beacon holder for blockchain technology, the latter as no other nation is close to China’s progress with in terms of digital currency development.

But the advancement of disruptive technology is not China’s motive to spearhead digital currency development, if recent developments are considered.

Instead, the Eastern superpower wants to leverage blockchain to gain a greater foothold over its citizens’ transactions and financial activities — an ideology completely contrary to that of Bitcoin’s.

Capping all large transactions

The country will now track all “large” transactions over RMB 100,000 (or $14,000 at current rates) to curb capital flight and closely monitor fraud.

Starting July, banks in China’s Hubei province shall record serial numbers for all cash transactions over the 100,000 yuan threshold; and reporting gross figures to the People’s Bank of China (PBoC).
Eventually, the digital yuan will be deployed to provide real-time insights and transaction Chinese regulators — with the ultimate motive to stamp out currency fraud in the country.

While no exact date for the launch exists, reports suggest President Xi Jinping is pushing the launch of Digital Yuan before the 2022 Winter Olympics in Beijing.