China’s digital yuan is one of the first CBDCs whose pilot phase has expanded to millions of users and billions in transaction volume. China’s central bank governor, Yi Gang, recently spoke at Hong Kong Fintech Week about the advances of his national digital currency, the Digital Yuan. He described the progress and launch of the national digital currency. During his speech, Yi noted that the digital yuan is positioning itself as an alternative to cash in China, a country with a solid digital currency. Payment infrastructure. He added that “privacy protection is one of the main issues on our agenda.”
He then described the two-tier payment system that would give users controllable anonymity. At level one, the central bank provides digital yuan to authorised and only processes inter-institutional transaction information. At level two, authorised only collect the personal data necessary for their exchange and distribution services to the public.
Yi promised that the data would be encrypted and stored, and sensitive personal information would be shared with third parties. Users can also make anonymous transactions up to a certain amount, and specialists will facilitate this. Transactions. Noting that anonymity is a double-edged sword and therefore needs to be treated with caution, particularly in the financial arena, the central bank governor stated:
“We recognize anonymity and transparency are not black and white, and there are many nuances that need to be carefully considered, in particular; we must strike a precise balance between protecting the privacy of individuals and combating illegal activities.
Yi’s comments align with Mu Changchun, director of the CBDC program, who reiterated a similar stance in July, saying CBDC doesn’t have to be as anonymous as cash. Mu noted that a completely anonymous CBDC would affect the prevention of crimes such as money laundering, terrorist financing, tax evasion and others. China launched its CBDC program back in 2014 and, after years of development, launched the pilot program in 2019. Since then, the program has expanded to million retail customers worldwide. Country. In 2022, CBDC testing was extended to some of the most populous provinces. The scale of the CBDC trail can be gauged from the fact that the total volume of digital transactions in yuan surpassed $14 billion in the third quarter of 2022.