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Global Trend Against Cash Intensifies as China Joins the Squeeze

For various reasons, a growing number of nations are experiencing the rapid development of cashless society. Paper money may become extinct in some countries in the not-so-distant future. Prompted by the spread of private and decentralized cryptocurrencies and the threat of losing control over their monetary policies, more and more governments are now working to create central bank issued digital currencies to replace banknotes and coins. China has joined the campaign against cash, although not at the expense of centralized monetary power.

Also read: Japan Pushes Cashless Agenda by Rewarding Non-Cash Payments After Tax Hike

China to Trial ‘Large-Scale Cash Management’

In a move that many consider part of Beijing’s plans to introduce a digital version of the national fiat, the yuan, the People’s Bank of China (PBOS) has revealed plans to implement pilot programs aimed at exerting greater control over cash transactions. According to a notice issued by the central bank, the trials will be conducted in three Chinese regions, the provinces of Hebei and Zhejiang and Shenzhen City, within the next two years.

In a report addressing fears that the initiative will restrict public access to cash, the state-run news agency Xinhua explained that despite the rapid development of non-cash payment platforms in recent years, the total amount of cash in circulation has remained at a stable level while large-volume cash transactions have in fact continued to grow. Besides, these have been concentrating in specific areas, groups of people and periods, arguably lowering the overall efficiency of cash flow.

Global Trend Against Cash Intensifies as China Joins the Squeeze

PBOS shares its own reasons to implement the new control mechanism. Large amounts of cash are widely used in China, the bank points out, and they are exploited in criminal activities such as corruption, tax evasion and money laundering. The regulator will impose stricter supervision and introduce reporting requirements for cash operations over certain thresholds – 500,000 yuan (approx. $70,000) for public accounts, and for private accounts – 100,000 yuan in Hebei province, 300,000 yuan in Zhejiang province, and 200,000 yuan in Shenzhen.

“Under the requirements of large-scale cash management, banks need to deepen their understanding of current customers, strengthen risk warning and information communication for customers who are prone to generate large cash transactions, and guide them to use non-cash payment tools,” the Chinese central bank demands. It also proposes the establishment of a special registration system for large cash withdrawals, emphasizing that as long as a bank customer fulfills their obligations under the applicable rules, access to large sums of cash will not be restricted.

Other developed countries have already adopted regulations to increase control over cash flows and China is now trying catch up. After the new system is tested in the three regions, it is expected to form the basis of a long-term large-scale cash management mechanism. According to the Xinhua report, Beijing’s main motive is to “promote the concept of rational use of cash.” But the new focus on increased oversight over cash transactions may also be related to the plan to issue a digital yuan, one of the main purposes of which is to exert greater control over financial transactions.

Is This the End of Paper Cash?

In the digital age, a walk away from cash sounds like a natural development. There is now a race between state actors, corporations, and communities to issue digital currencies that will replace paper notes and metal coins. There’s a lot of politics, geopolitics, macro- and microeconomics involved in the deepening competition to build the cashless society. If you visit a country like Sweden, you’ll realize it has already been created to a large extent. You’ll need a mobile app or a bank card far more often than banknotes to pay in stores. Consumer transactions with non-cash methods reach almost 60%. In fact, a number of bank branches in the country don’t accept or process cash deposits and withdrawals.

Global Trend Against Cash Intensifies as China Joins the Squeeze

Cash is disappearing in the Nordic nation, an article published recently by the Guardian noted. The piece describes Britain’s own rapid departure from paper money as well. The amount of Swedish cash in circulation has dropped from 80 billion to 58 billion kronor in the last four years, a reduction of over 27%. During the same period, ATM withdrawals fell by more than half. Meanwhile, in the U.K. cash transactions declined by over 50% between 2008 and 2018. Even Japan, where almost 80% of people use cash every day, is now promoting cashless payments, as reported this week.

But not all types of cashless relations are in the best interest of states and governments are starting to realize that. Paper money has certain advantages for ordinary people, like better privacy for the holder, that governments don’t mind getting rid of, which to a large extent explains the initial push to create cashless societies. A banknote is a contract in ink and paper between the issuer, a central bank, and the bearer, a citizen or a resident. In modern cashless societies these contracts are replaced by contracts between people and companies, on the one hand, and third parties such as commercial banks and payment processors, on the other. When bank branches and stores in Sweden reject government issued bills that’s is a problem for the Swedish state and its sovereignty over money. The threat is even greater in the case with currencies issued by corporations such as Facebook or Alipay, for example, where government money will not be part of the contract at all.

Global Trend Against Cash Intensifies as China Joins the Squeeze

It’s not surprising then that a growing number of states are trying to create their own digital currencies. Sweden’s Riksbank has been working on an e-krona for some time, which will be a central bank digital currency (CBDC). While the Bank of England has previously stated it is not planning to issue one, a couple of months ago Governor Mark Carney suggested that a network of CBDCs could unite to create a new “Synthetic Hegemonic Currency”. This sounds realistic as according to a study conducted by the Bank of International Settlements (BIS), 70% of 63 polled central banks are exploring the issue of CBDCs. Now as China is vowing to become the first nation with a digital fiat, pressure has been mounting on the U.S. Federal Reserve and the European Central Bank to create a digital dollar and a digital euro.

While paper notes and metal coins still have an appeal because of their physical qualities, since the invention of fiat money part of the subject of the contract they represent has been lost. Sterling in the name of the British currency doesn’t refer to a silver alloy anymore and this isn’t going to change with the introduction of its digital version. Money based on other contracts, such as with corporate entities and third parties, certainly comes with many disclaimers as well. That creates a real window of opportunity for permissionless decentralized cryptocurrencies, now when societies are going cashless, and a recently conducted survey showed that almost a tenth of Chinese students already own crypto. To use digital cash in financial interactions with others, you neither need a contract, nor a third party.

What’s your prediction about the outcome of the race between various digital currencies to replace paper money? Share your thoughts on the subject in the comments section below.

Op-ed disclaimer: This is an Op-ed article. The opinions expressed in this article are the author’s own. is not responsible for or liable for any content, accuracy or quality within the Op-ed article. Readers should do their own due diligence before taking any actions related to the content. is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any information in this Op-ed article.

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Lubomir Tassev

Lubomir Tassev is a journalist from tech-savvy Bulgaria, which sometimes finds itself at the forefront of advances it cannot easily afford. Quoting Hitchens, he says: ”Being a writer is what I am, rather than what I do.“ International politics and economics are two other sources of inspiration.

Lubomir Tassev , 2019-11-16 10:00:03 ,

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NewsBlock © 2019 - 2020 All rights reserved.

NewsBlock © 2019 - 2020. All rights reserved.

While Bitcoin’s price seemingly moves without rhyme or reason — collapsing by dozens of percent and embarking on face-melting rallies on a whim — the cryptocurrency market is filled to the brim with fractals.

Related Reading: Analyst: Bitcoin Price Likely to Fall to Low-$8,000s as Chart Remains Weak

A brief aside: A fractal, in the context of technical analysis and financial markets anyway, is when an asset’s price action is seen during a different time. This form of analysis isn’t that popular, but it has proven to be somewhat valuable in analyzing Bitcoin.

One recent fractal popularized by a well-known cryptocurrency trader is implying that BTC is going to return to the low-$7,000s in the coming days.

Bitcoin Fractal Implies Retracement to Low-$7,000s

A well-known crypto trader going by “Tyler Durden” on Twitter recently posted the chart below, which shows that a Bitcoin price fractal may be playing out. The fractal has four phases: horizontal consolidation marked by one fakeout, a surge above the consolidation phase, a distribution, then a strong drop to fresh lows.

If the fractal plays out in full, BTC could reach the low-$7,000s again, potentially as low as $7,100. This would represent a 20-odd percent collapse from the current price point of $8,800.

It isn’t only a fractal that is hinting Bitcoin has the potential to visit its lows. As we reported on Saturday, Bloomberg believes that if the GTI Vera Convergence Divergence Indicator flips red, a downtrend could push the cryptocurrency back to $7,300.

Related Reading: Stephen Colbert Pokes Fun at Bitcoin in Monologue: Mainstream Gone Wrong?

Can Bulls Step In?

But again, many believe it is irrational to have such bearish interpretations of the cryptocurrency’s chart at the moment. As reported by NewsBTC earlier, Popular crypto trader Mayne recently noted that the “people waiting for $6,000” are irrational. He quipped that Bitcoin retracing and consolidating after its fourth-biggest bull move in history ($7,300 to $10,500, a 42% gain) is perfectly par for the course, but noted that it’s totally possible we can go lower from $8,800.

The medium-term technicals support this.

Trader and CoinTelegraph contributor FilbFilb found that by the end of November or start of December, the 50-week and 100-week moving averages will see a “golden cross,” which he claims is far more significant” for the Bitcoin market that other technical crosses.

Also, a Bitcoin price model created using Facebook Prophet machine learning found that the leading cryptocurrency is likely to end the year at just over $12,000. What’s notable about this model is that it called the price drop to $8,000 months in advance, and forecasted a ~$7,500 price bottom for BTC.

To put a cherry on the cryptocurrency cake, Crypto Thies observed that when Bitcoin bottomed at $7,300, it bounced decisively off the 0.618 Fibonacci Retracement of the move from $3,000 to $14,000, which correlates with the two-week volume-weighted moving average. He added that summer 2019’s consolidation was marked by Bitcoin flipping major resistances into support levels, implying that a bullish reversal and subsequent continuation is likely possible in the coming weeks.

Featured Image from Shutterstock

Nick Chong , 2019-11-10 12:00:38

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