The Chinese government is determined to respect the privacy of its citizens and protect their personal information, state media reported, quoting a senior central bank official. The statement comes in light of the country’s government push for greater adoption of e-CNY.
e-CNY or the digital yuan is a cash-like digital currency that is supposed to be used for retail transactions by users. Initially announced in 2021, the Chinese government had moved it to the pilot stage, running the currency through registered digital institutions in various cities. Earlier this year, the currency saw a trial run during the Winter Olympics as well.
Limited anonymity is a key feature, Mu Changchun, director-general of the central bank’s Digital Currency Research Institute told Reuters, saying that ensures “reasonable anonymous transactions.”
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The point of e-CNY is that it combats illegal activities such as money laundering, tax evasion as well as terror financing while maintaining financial security Mu said at a forum according to a report from Securities Times.
The digital currency was brought into operation by the People’s Bank of China. This way, e-CNY works as a traceable replacement for notes and coins. This isn’t the first time that China has been working on something like this. The country has been running various pilot projects and schemes dedicated to replacing current payment scenarios over the past few years.
The rest of the world is most likely going to be playing catchup with China as other central banks are looking to develop Central Bank Digital currencies to replace their own ageing financial systems. Since cryptocurrencies have become more and more of a mainstay in financial payments, banks are scrambling to ward off the competition.
To promote the digital currency, cities that are part of the pilot program have taken to distributing free digital cash in a bid to revive consumption and promote the use of e-CNY. According to PBOC, the currency can be used to make purchases of any goods or services that one would buy with banknotes and coins.