Unspoken need of central bank: to curb corruption with digital currency
There has been significant progress on the issuance of digital currency by PBOC. Blockchain-based commercial paper exchange has been successfully test in its beta stage. The beta also signals the start of test operation of digital currency platform. It’s also reported that after the 2017 Spring Festival, the PBOC Digital Currency Research Institute will be officially founded.
The Chinese authority is actually accelerating the adoption of digital currency. But why? One unspoken need is to curb corruption.
In May 2014 , investigators found 200 million yuan in cash at Wei Pengyuan’s house, weighing 1.15 tons. 4 out of the 16 banknote counters burnt out on site. This is the corruption case with record high amount of money since 1949.
A netizen made a image comparison: a standard soccer field is about 7,140 square meters and one million 100 Yuan banknote equals 11,935 square meters, which means that Wei’s cash could at least cover 3 soccer fields! In October 2016, Wei, former senior energy official, was sentenced to death with a two-year reprieve for accepting bribes of 211.7 million yuan ($31.4 million) and possessing a huge amount of property from an unidentified source, according to a court in Hebei province.
Wei is not alone.
An official in the Chongqing Department of Transportation, stashed 9.39 million RMB cash in 8 sealed cardboard boxes. A broken water pipe in the toilet, where the cash were stored, leaked the secret.
Yao Jianhua, former deputy head of Tianjin Tanggu District, was reported. The prosecutor found gold, RMD and USD and certificate of bank deposits from fish stomach, screen door, waste paper box and flue sealed with cement in his house.
An official in Guizhou Province hid deposit certtificate in a special belt. Then the belt was stolen along with trousers. The case was exposed after the thief threw away the trousers.
In addition to corruption, excessive cash also raises other concerns related to cash. Such as drug trafficking, money laundering, terrorism and other illegal activities, where the regulatory force found themselves blind.
The current banking system is weak in monitoring money laundry or crime-related transactions. None of the corrupted officials had unusual transaction on their bank accounts as they are fully aware that the account is being watched by authorities. Once people withdraw cash from bank counter or ATM, the authority cease to track the flow of money and the feeling of losing control is not good. Judging from the money laundry case via bitcoin exchanges, the Chinese authority has strong momentum to log money flow in the monetary system, which blockchain technology outperforms any other options available. Blockchain may restore control and monitoring for financial regulatory authorities to play a more perfect supervisory role in the monetary network. Digital money would be a crucial cornerstone.
However,the preservation of privacy, especially the personal property, is what the bitcoin community fight for, even the root cause of recent debate on scaling.
Since the new administration came into power in 2012, the government has been cracking down corruption plagues among officials. The CPC will convene its 19th National Congress in 2017, and it needs to accomplish several missions, among which to build a clean CPC is an important subject.
“The fight against corruption has gained ‘crushing momentum’, netting both ‘tigers’ and ‘flies’ with no letup expected in the future.”
So far there is no official report that link bitcoin with corrupted officials in China.