China’s central bank, The People’s Bank of China (PBoC), plans to sanitize billions of yuan notes in areas that are worst affected by the coronavirus. The epidemic, which has hit China’s political, economic, and education systems very hard, has pushed the nation’s authorities to take extreme actions to curb the spread of the virus. As China prepares to launch a Central Bank Digital Currency, the arrival of Bitcoin and digital currencies would prevent the need for something this drastic.
In a bid to curb the spread of the coronavirus, The People’s Bank of China has announced that it will sanitize billions in hard cash in areas that have been struck particularly hard by the contagion. This includes paper currency that is in circulation around hospitals, meat markets, and bus depots. [Bloomberg]
Local media reports that over $1 billion worth of the Chinese yuan was taken out of circulation, while a ban on cash payments was also instituted. [South China Morning Post] Officials stated that the cash will be under quarantine for 14 days, before returning to local banks. The deputy governor of the central bank, Fan Yifei, said that “Money from key virus-hit areas will be sanitized with ultraviolet rays or heated and locked up for at least 14 days before it is distributed again.”
There are currently over 73,000 reported cases of the virus, resulting in nearly 1,900 deaths. Besides China, Southeast Asia accounts for most of the cases.
The Coronavirus’ Impact on the Economy
Infection rates of the coronavirus continue to trouble the nation and keep global authorities on edge, although the spread seems to be slowing down. The virus has sparked outrage among residents in stricken towns, most of which are experiencing an acute shortage of basic medical supplies, including medical masks.
Much discussion has already been sparked about the effect the virus has had on China, which will undoubtedly see its tourism and other major economic sectors suffer. The sudden and serious ramifications of the virus have brought a variety of obstacles, including the aforementioned shortage of supplies, a halt in the productivity of various industries, and a struggle to accommodate the sheer number of infected patients.
As is the case all around the world, older generations tend to prefer transacting in cash. This is especially problematic considering that this age group is most vulnerable to the virus. While China is quite advanced when it comes to electronic transactions, there is still a large circulation of paper money.
All the More to Switch to Cryptocurrency
The coronavirus has brought to light the problems associated with fiat money, for which there is now a much better alternative that avoids all said issues – namely cryptocurrencies. The latter is an asset class that has signs of being uncorrelated to factors that affect traditional assets. which is particularly helpful in incidents such as this. Cryptocurrencies are also beneficial in a myriad of other ways, such as the implementation of smart contracts that help reduce the need for human involvement in many industries.
On their part, the Chinese Government has repeatedly described its plan to launch and test a Central Bank Digital Currency (CBDC), which would certainly have a sizable impact on the market. Given the difficulties now being faced with paper money, Chinese officials will certainly be looking to fast track the digital currency version of the yuan, which investors believe will drive adoption for Bitcoin and altcoins.