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Digital Yuan Will Provide Controllable Anonymity: Chinese Central Bank Exec


According to a Chinese central bank executive, digital yuan will provide 'controllable confidentiality.' China's digital yuan is one of the first Central Bank Digital Currency (CBDCs), with millions of users and billions of dollars in transaction volume. 




Digital Yuan Will Pr

In a recent speech at Hong Kong Fintech Week, Chinese central bank 

Governor Yi Gang discussed the growth of their national digital currency, the digital Yuan. 

He described the progress and acceptance of the national digital currency.

During his address, Yi mentioned that the digital yuan is being positioned as an alternative to currency in China, a country with a robust digital payment infrastructure. He also stated that privacy protection is a significant priority on our agenda.

He went on to outline a two-tier payment structure that would provide consumers with adjustable anonymity. At tier one, the central bank simply provides authorised operators with digital yuan and processes inter-institutional transaction data. Tier two permitted operators collect only the personal information required for their public exchange and circulation services.

Yi stated that data would be encrypted and retained, and that sensitive personal information would be anonymized and not shared with third parties. Users can also make anonymous transactions up to a specific amount, and specialised e-wallets will be available to facilitate those transactions. The central bank governor stated that anonymity is a two-edged sword that must be used properly, particularly in the financial realm, and explained:

“We know that anonymity and openness are not black and white issues, and that numerous nuances must be carefully considered. We must strike a delicate balance between protecting individual privacy and fighting illicit activity.”

Yi's remarks are consistent with the central bank's digital currency (CBDC) program head Mu Changchun, who stated in July that CBDC does not have to be as anonymous as cash. According to Mu, a completely anonymous CBDC would impede the prevention of crimes such as money laundering, terrorism financing, tax evasion, and others.

China began its CBDC program in 2014 and, after years of research, launched the pilot program in 2019. Since then, the program has reached millions of retail customers nationwide. CBDC testing will have expanded to some of the most populous provinces by 2022. The total digital yuan transaction volume will have surpassed $14 billion by the third quarter of 2022, indicating the extent of the CBDC trail.

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