CHINA TO RETAIN PHYSICAL CASH
The Jan. 12 Forbes magazine headline “Crypto vs. China’s Digital Currency: Never The Twain Shall Meet” appears to say it all regarding China’s attitude towards a currency system The Peoples’ Republic can’t monitor.
China is more interested in its government owned and controlled e- yuan. The e- yuan has been recently highlighted in the Alibaba owned newspaper South China Morning Post. According to the Feb. 4 issue, Zhongguancun Bank in Beijing and NewUp Bank in Liaoning each gained permission from China’s central bank to suspend all cash services.
Despite these news flashes it does not appear China is in any hurry, if ever at all, to drop its coins and bank notes in favor of some form of electronic cash system.
It is true that Zhongguancun Bank, which serves customers in the capital of Beijing, said it would suspend cash services, including over- the- counter deposits, withdrawals, and cash services at ATM machines beginning in April. The decision followed a similar move by regional bank NewUp Bank of Liaoning in the northeastern province of Liaoning. NewUp Bank stopped cash services in March. Both banks have since back peddled under pressure, announcing they will continue cash services.
On Feb. 22 the Chinese news service Xinhua reported “Any commercial bank that has physical outlets must provide cash deposit and withdrawal services.”
The People’s Bank of China has since fined 32 entities, including public services institutions, for refusing to accept cash in the fourth quarter of 2021. Fines ranged from 1,000 to 100,000 yuan.
It was acknowledged at a recent meeting of the PBOC and the China Banking and Insurance Regulatory Commission that “cash refusal occurs occasionally in the society and some banking institutions have shown a decline in willingness to handle cash transactions.” The central bank and commission agreed at the meeting that cash services continue to play a vital role in serving what was termed” the real economy” as well as a stabilizing factor for the monetary and financial systems.
Merchants Union Consumer Finance Chief Researcher Dong Ximiao was quoted in the Feb. 24 China Daily newspaper as saying, “If more offline institutions reject accepting notes and coins or discriminate against cash payments, it will not only affect the circulation of the renminbi but inconvenience individuals who are used to cash payments, such as seniors.”
Dong continued, “Commercial banks should not take developing digital technology as their sole pursuit, nor should they simply shun necessary services costs.”
The China Daily reported unidentified experts as saying, “Even though online and mobile payments have gained great popularity in China, groups including the elderly, rural residents, small and micro- sized enterprises and self- employed businesses still often prefer cash payments, pointing to the necessity of strengthening cash services.”
According to the PBOC, there was 9.08 trillion yuan ( about $ 1.43 million U. S.) in circulation at the end of 2021. The central bank released about 651 billion yuan into circulation during the same year. That’s an increase of more
than seven percent.
China currently circulates coins in denominations of 1 and 5 jiao and 1 yuan. Older fen and now obsolete larger diameter jiao coins can still be exchanged for newer currency. The diameter of these coins was reduced in 2019. Bank notes are used in denominations of 1, 5, 10, 20, 50, and 100 yuan. People’s Bank of China data indicates coins are more popular in urban areas, while small denomination bank notes are more popular in rural areas.
The state- owned China Banknote Printing and Minting Corporation is responsible for all coin and bank note production. Coins are minted at facilities in Nanjing, Shanghai, and Shenyang.
Special paper used to print bank notes is manufactured at plants in Baoding and Kunshan. Bank notes are printed in Baijing, Chengdu, Nanchang, Shanghai, Shijiazhuang, and Xi’an. The central bank has said the Baoding facility is the largest such facility in the world. The central bank also has its own printing technology research division at which innovations meant to deter counterfeiters are initiated.