A top Chinese central bank official has said that the country’s forthcoming digital currency will offer “controllable anonymity.” Speaking at a forum in Beijing, Mu Changchun, said that the digital Yuan would allow users to keep their identities hidden when making transactions if they so wished.
Changchun is the director of the People’s Bank of China (PBoC) ‘s Digital Currency Research Institute. However, he added that the central bank could also track and trace transactions made using digital currency if necessary.
A Trial Of The Digital Currency
The comments come as China prepares to launch the next trial phase for its national digital currency in the coming months. The move is a way for the country to gain a first-mover advantage in the race to develop a global digital currency and assert its financial dominance on the world stage.
The digital Yuan will be similar to other digital currencies, such as Facebook’s Libra, but it will be backed by the full faith and credit of the Chinese government. The launch of the digital Yuan is part of a broader push by China to digitize its economy and move away from cash.
Also read:The country has already rolled out some mobile payment platforms, such as Alipay and WeChat Pay, which billions of people use. The digital Yuan is also a way to help China’s central bank monitor and control the money in circulation and reduce the costs associated with printing and circulating physical currency.
The full launch of the digital Yuan is still several months away, and it remains to be seen how successful it will be. However, if it does gain traction, it could significantly impact global financial systems.
The Progress Of The Currency
China’s apex governor, Yi Gang, recently spoke at a Fintech Week discussing the progress level of China’s CBDC. He noted that the digital Yuan is an alternative to cash in China, and privacy protection is a key priority.
He described the two-layer payment system that would offer controllable anonymity to users, with the central bank only supplying digital Yuan to authorized operators and processing inter-institutional transaction information at the first layer.
The legitimate operators receive private data essential for their business and circulation duties to the populace at the second tier. The PBoC said that the total value of digital Yuan transactions had reached 2.8 trillion Yuan ($437.3 billion) by the end of September.
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