The central bank's head of the digital currency unit in China says it will protect the data related to the use of digital yuan as the country moves forward with tests of the currency, also called e-CNY.
PBOC's Take on Digital Yuan
According to Bloomberg, only a limited amount of personal information is collected when people use digital yuan.
Mu Changchun, the head of the Digital Currency Institute at the People's Bank of China (PBOC), said that access to the digital yuan would be restricted.
For normal transactions and purchases, neither the Bank of China nor the platforms that operate covert digital currency will be able to get all of the information regarding trading.
Mu said that authorities should only ask to use the digital currency data when it is needed to investigate transactions that authorities suspect has violated laws.
Mu reiterated that the digital yuan has the highest level of privacy protection among the current digital payment tools.
Still, he stated that it is not proper for digital currency to be as anonymous as cash because that would facilitate money laundering and other illegal behaviors.
During Mu's speech regarding the digital yuan on July 23, he stated that the isolation mechanism and restrictions should be created to regulate the use of client data.
Operators of digital currency platforms should set up an internal system to protect client data and monitor relevant work.
Only certain authorities should be allowed to check people's e-Wallets, and only a couple of them have the authority to freeze or transfer money based on legal reasons.
Mu added that operators should have the right to refuse such requests if necessary.
The regulators will also have to penalize non-compliant use of data, and the country should study and roll out legal regulations in due time to combat money laundering and terrorism financing using digital yuan.
Struggles of Launching Digital Yuan
According to Nikkei Asia, China first embarked on the journey toward the digital yuan eight years ago. It is PBOC's pilot program for the digital yuan has been expanded to 23 cities covering almost one-fifth of the Chinese population.
However, a full launch of the currency remains elusive as a population already used to mobile payments like WeChat Pay and Alipay sees no reason to abandon the apps.
In March, PBOC doubled the number of cities that were participating in the pilot program, allowing the residents to shop and take public transportation using the digital yuan.
Some of the cities that were added were Tianjin, Fuzhou, Chongqing, and Hangzhou, and there may be a lot more in the next couple of months.
In October 2020, a PBOC task force studied central bank digital currencies 2014 in Shenzhen. By the end of 2021, 216 million, or around 20% of China's population, had created a digital wallet on the bank's app. The number is expected to increase by the end of 2022.
The central bank has stated that they have overcome challenges like lags in processing payment information. The full launch of the digital currency came after the Beijing Winter Olympics back in February.
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Written by Sophie Webster
