Recently, the governments of China and Japan have introduced various measures to reduce the use of cash in their country, with the aim of achieving greater control over transactions, which will make them cashless countries.
In China, the People’s Bank of China (PBoC) will intervene to drive restrictions on large-scale cash transactions in three different regions of the country, while in Japan, they will introduce cashbacks or refunds of up to 5% on cashless purchases.
In the specific case of China, it seems that the introduction of the new national digital currency (CBDC – Central Bank Digital Currency) will take place after a series of checks by the central bank which is currently involving an expert who will pave the way for the next Renminbi digital token (RMB).
In particular, the PBoC aims to encourage its customers to reduce their use of cash since large transactions are reported to facilitate illegal criminal activity, corruption, tax evasion and money laundering.
In fact, the PBoC’s plan is to limit deposits/cash withdrawals of large amounts for business accounts ranging from 500,000 yuan ($71,000) and above, while on personal accounts the limits range from 100,000 yuan ($14,000) to 300,000 yuan ($43,000), depending on the province.
Japan becomes a cashless country
In Japan, however, the situation is quite different: it seems that the manoeuvre is purely political in nature. It is the government that offers effective discounts of up to 5% to all consumers who decide to use cashless payment systems.
According to the reports, the government manoeuvre was introduced after the increase of the sales tax from 8% to 10%, with the attempt to increase the revenues and reduce the national deficit, in a country where e-money, mobile payment systems and recently crypto apps are growing continuously.
In both cases, it seems that the mission is to become cashless countries, as stated by Co-founder & Partner at Morgan Creek Digital, Anthony Pompliano, on the Chinese case:
The People's Bank of China (PBOC) just announced that it is going to start testing tighter capital controls on cash transactions in certain provinces.
This is another step towards a truly cashless society.
— Pomp 🌪 (@APompliano) November 14, 2019
The potential crypto scenario in cashless countries
Cryptocurrencies are already alternative payment methods to the traditional centralised currencies of banks and governments.
In the country of the crypto ban, China, the new digital RMB token, the details of which have not yet been announced, may soon result in a scenario where RMB could be the new national token that is competitive on a global scale and perhaps even based on blockchain.
While in Japan, despite the political manoeuvres, the crypto scenario is already widespread. Giants like Rakuten e-commerce and the popular Line messaging service already have active applications for trading and purchasing cryptocurrencies that are actually linked to their mobile cashless payment services R Pay and Line Pay.