China's digital yuan, the central bank's digital currency (CBDC), has sparked greater concern over user privacy in recent times. Experts argued that the digital yuan could give the jurisdiction significant access to citizen data, further enabling state surveillance.
A senior central bank official spoke of a "misunderstanding" and made it clear that the country fully respects the needs to protect privacy and personal information.
The e-CNY collects less information about users
Mu Changchun, head of the People's Bank of China (PBoC) Institute for Digital Currencies, answered questions about the privacy issues of the digital yuan during a forum held Sunday in Fujian, China.
He pointed out that complete anonymity has never been considered for the CBDC and that China will protect data related to the use of the digital yuan, according to local media reports. He noted that:
“First, controllable anonymity is an important feature of digital RMB [e-CNY]. On the other hand, it also prevents and fights money laundering, terrorist financing, tax evasion and other illegal activities ”.
His observations come as the country is constantly moving with the pilot tests of the digital currency.
According to a Bloomberg report, access to the limited information gathered from people using the digital yuan is limited. Furthermore, neither the central bank nor the platforms handling CBDC transactions would obtain any information about the exchanges. Mu stated that:
"Authorities should ask to use the data only when it is necessary to investigate transactions suspected of violating the law."
In addition, Mu stressed the digital yuan's "two-tier operation" system, which ensures that personal information cannot be requested or used without legal authorization.
"Based on the design of the two-level operating system and the portfolio matrix, the digital RMB follows the principles of autonomy, transparency and minimization and collects the necessary personal information directly related to the purpose of the processing, according to the wishes of the users".
However, users have the right to close these permissions at any time, and applying the digital yuan will immediately stop the process of extracting personal information.
With CBDCs, you could buy everything you buy with banknotes
Mu also denied the claim that the e-CNY cannot be used to purchase gold (XAU). He stated that the digital yuan is legal tender in digital form, can be exchanged 1: 1 for fiat currency, and can buy anything the banknotes can buy.
"Banknotes and coins can buy gold and exchange foreign currency, and the same goes for the digital yuan."
The full launch of the digital version of the yuan is still a long way off, as most of the population already uses mobile payment applications such as WeChat Pay and Alipay. Or Bitcoin Pro to trade online.
The PBoC CBDC pilot program has been extended to 23 cities, covering nearly a fifth of the mass population. In March, the central bank extended the pilot program to other cities, allowing residents to shop and travel on public transport using the digital yuan.
Mu stressed that the "controllable anonymity" of the e-CNY will play a positive role in providing better and safer payment services to the public.
