China will respect privacy and protect personal data when using the digital yuan. This was stated by a top central bank official quoted as saying Sunday in state media. Beijing is encouraging greater adoption of eCNY.
Mu Changchun, the director-general at the central bank’s Digital Currency Research Institute, said that the digital currency has a limited anonymity. He noted that it allows for reasonable anonymity in transactions.
According to Securities Times, Mu said at a forum that “on the other hand, it also prevents and combats illicit activities including money laundering and terrorist financing, tax evasion and tax evasion.
The People’s Bank of China has been a leader in developing and issuing a digital currency central bank (CBDC) that will replace notes and coins.
Other central banks are also looking into developing CBDCs in order to modernize their financial systems, fight off competition from cryptocurrency such as Bitcoin and accelerate domestic and international payment.
China’s efforts to improve the payment system are some of the most advanced in the world. In recent years, China has run a number of pilot schemes and trials that have tested different payment options.
Mu stated that the e-CNY is the digital version issued by the PBOC of fiat currency and can be used for any purchase that can be made with banknotes or coins.
He said that banknotes and coins could be used to buy gold or convert foreign currency. The e-CNY can do the same.
Some cities gave away digital cash in May to help boost consumption and businesses affected by the pandemic curbs. Future e-CNY applications will be more transparent and effective to increase transparency and effectiveness of government policies.