Concerns over capital flight from China through Bitcoin

April 4, 2018

While the renminbi was appreciating the impetus to move funds out of China was muted but over the last couple of years the renminbi has been depreciating and it has been difficult for regulators to stop the flow of funds offshore.  This outflow of capital is of particular concern to China as the cash flight puts further downward pressure on the currency and China has been using its reserves to prop up the renminbi.  While the People’s Bank of China and the State administration of foreign exchange could stem the tide of official capital flow using regulation, this didn’t initially extend to cryptocurrencies.  In fact one of the factors contributing to the increased use of Bitcoin in China was its use in evading capital controls.     

 

 

 

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