China has vowed to protect the privacy of users of the digital yuan as it pushes for greater adoption, allaying fears from the country’s critics.
Mu Changchun, director-general of the Digital Currency Research Institute of the People’s Bank of China (PBoC) has reiterated the government’s commitment to protecting the privacy rights of digital yuan users.
The concerns around privacy have been a talking point for critics of central bank digital currencies (CBDCs) in general, and have been heightened over China’s past and previous privacy violations of its citizens.
A core feature of the CBDC is limited anonymity, although it remains unclear how the government intends to ensure privacy protections.
Speaking on the nature of the CBDC, Changchun told Security Times, that mechanisms in place will prevent illicit activities “including money laundering, terrorist financing, and tax evasions,” while still guarding the privacy of users.
Digital yuan will operate like banknotes, but America eyes it with suspicion
The digital yuan has passed several stages of trials in different Chinese cities, notably making an appearance at the Winter Olympics. The pilot schemes and deployment in transportation sectors in key cities serve as proof that the CBDC would operate in the same ways as banknotes and coins.
“Banknotes and coins can buy gold and convert foreign currency, so does the e-CNY,” said Changchun.
In the U.S., three Republican senators have proposed a bill to ban the use of the digital yuan in app stores in the country’s cyberspace. The senators claimed that the “Chinese Communist Party will use its digital currency to spy on anyone who uses it,” with the Chinese embassy denying the allegations in their entirety.
Large-scale adoption underway in China
At the Fifth Digital China Summit in Fuzhou, held over the weekend, financial institutions unveiled a series of products tailor-made for the digital yuan. For example, China Construction Bank (CCB) displayed a new mobile app for the CBDC, a tangible digital yuan wallet, and a chip card for customers to settle transactions with.
The Agricultural Bank of China (ABC) entered into partnerships with supermarket franchises to promote the CBDC, with chains racking up impressive transaction volumes along the way.
An alliance of 37 members has since been formed, with the main object clause being the promotion of the digital yuan. The core members being large, state-owned banks.