The Governor of the People’s Bank of China (PBoC), Yi Gang, has revealed new details regarding the country’s CBDC (Central Bank Digital Currency). During the recent Fintech Week held in Hong Kong, the PBoC Governor emphasized the adoption and other vital details in the build-up to the official launch of the country’s CBDC.
PBoC claims the CBDC will have limited anonymity
Yi Gang mentioned that the country intends to launch digital currency as a direct substitute for cash. The government wants to actualize this despite having one of the best payment systems in the world. Gang clarified that the PBoC plans to make privacy protection of the core issues that are being discussed.
The Governor also revealed that the payment system would consist of two layers which would provide users with anonymity that the bank controls. In the first tier, the bank intends to give the CBDC to merchants and help with transactions across banks. In the second tier, the merchants can collect information to help facilitate transactions. Gang stressed that the bank would collect sensitive data and encrypt them. This way, third-party apps cannot access the encrypted information.
China wants to eliminate illegal activities
The PBoC also mentioned that transactions using the CBDC would be anonymous. However, users transacting more significant amounts will have to provide and verify their identity. The Governor declared that anonymity is something that must be considered carefully. He also explained that there has to be a line between enabling anonymous transactions and checking fraudulent acts.
This latest comment by the Governor echoes the same sentiments shared by an executive back in July. The executive, at the time, stated that the CBDC should hold a level of anonymity that is not on the same level as native cash. He also declares that total anonymity will enable bad actors to carry out various illegal activities like money laundering. China launched its CBDC program in 2014 before launching a pilot test in 2019. Since that period, the PBoC has spread the test across several merchants in the country. The total amount of transactions carried out using the CBDC has exceeded $14 billion.