China will fully respect privacy and protect personal information when using the digital yuan, state media quoting a senior central bank official said on Sunday, as Beijing pushes for greater adoption of the e -CNY.
Limited anonymity is a key feature of the digital yuan, said Mu Changchun, director general of the central bank’s Digital Currency Research Institute, noting that it ensures reasonable anonymous transactions.
“On the other hand, it also prevents and combats illegal activities including money laundering, terrorist financing and tax evasion, maintaining the need for financial security,” Mu told a forum, quoted by the Securities Times.
The People’s Bank of China is a forerunner in developing and issuing a central bank digital currency (CBDC), which in the case of e-CNY will be a traceable replacement for banknotes and coins.
Other central banks are planning to develop CBDCs to modernize their financial systems, ward off competition from cryptocurrencies such as bitcoin, and speed up domestic and international payments.
China’s efforts are among the most advanced in the world, and the country has conducted various trials and pilots of different payment scenarios in recent years.
Mu also said that e-CNY, which is the digital version of fiat currency issued by the PBOC, can be used to purchase anything that can be purchased with banknotes and coins.
“Banknotes and coins can buy gold and convert foreign currencies, just like e-CNY,” he said.
In May, some cities handed out free digital money to boost consumption and help businesses hit by pandemic curbs, with more e-CNY apps expected in the future to boost transparency and efficiency government policies.