According to recent reports, an official of the People’s Bank of China (PBoC) has stated that “completely anonymous central bank digital currency (CBDC) is not an option.” Mu Changchun, the director of the PBoC’s Digital Currency Research Institute, has added that a fully anonymous digital yuan is “not feasible.”
The statements were made at the China Development Forum in Beijing on Saturday, and the PBoC official also said that the bank needed to balance privacy for users with “international consensus” on risk control.
Regarding the digital yuan’s anonymity, Mu Changchun added that “The precondition of CBDC’s anonymity is it being risk-controllable and limited. A fully anonymous CBDC is not practical.” The complete anonymity of a CBDC is not feasible because it would violate anti-terrorist financing, anti-tax evasion, and anti-money laundering regulations.
Still, the director stated that the digital yuan would provide users with more privacy than commercial payment products, such as bank cards, Alipay, or WeChat, since such products are tied more closely to the banking system.
The digital yuan’s planned controllable anonymity means that privacy applies to end-users when they carry out transactions among themselves. The details of such transactions remain visible to the PBoC and regulators, though. By analyzing transactions, the bank would thus be able to “monitor” crimes.
However, Mu Changchun also said that thanks to the “ID anonymization technology” used, personal information would be concealed from “counterparties, operating agencies and other commercial institutions.”
This is the first time that the People’s Bank of China confirmed and presented in detail the use of the digital yuan both as a payment method and a high-level financial surveillance tool.