China vows privacy, information security in using digital yuan

China will fully respect privacy and protect personal information in the use of digital yuanState media on Sunday quoted a senior central bank official as Beijing encourages greater adoption of e-CNY.

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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 fair anonymous transactions.

“On the other hand, it prevents illegal activities including money laundering, terrorist financing and tax evasion and upholds the need for financial security,” the Security Times quoted Mu on a forum.

The People’s Bank of China is a leader in developing and issuing a central bank digital currency (CBDC), which will be a traceable replacement for notes and coins in the case of e-CNY.

Other central banks are considering developing CBDCs to modernize their financial systems, remove competition from cryptocurrencies such as bitcoin, and accelerate domestic and international payments.

China’s efforts are among them most advanced in the worldAnd the country has been running various test and pilot schemes of different payment scenarios in recent years.

Mu also said that e-CNY, which is the digital version of the fiat currency issued by the PBOC, can be used to buy anything that can be bought with banknotes and coins.

“Banknotes and coins can buy gold and convert foreign currency, so does e-CNY,” he said.

In May, some cities distributed free digital cash to revive consumption and help businesses hit by the pandemic, with more e-CNY applications expected to boost transparency and the effectiveness of government policies in the future .