The head of the Chinese central bank’s digital currency unit says that the Digital Renminbi will seek to protect the privacy of users to the greatest extent possible, but that the anonymity of the tool can only ever be “partial” due to security reasons.
Speaking at the 2021 China Development High Level Forum (中国发展高层论坛2021年会), Mu Changchun (穆长春), head of the People’s Bank of China (PBOC) Digital Currency Research Institute, addressed concerns about privacy protections for the Digital Renminbi.
Mu said that the Digital Renminbi provides the highest level of privacy protection out of all the payment tools currently in use on the market, and that it is technologically feasible for the Digital Renminbi to provide anonymity for small-sum transactions given that it is only “loosely coupled” to bank accounts.
“When using the Digital Renminbi for payments, we bundle the payments information of users and encrypt it, then send it to e-commerce platforms using sub-wallets,” said Mu.
“The platforms do not know this personal information, and this ensures the protection of the privacy of the core information of users.
“In addition to this, we also use many types of technology and system designs to ensure the privacy and security of users.”
Mu stressed the need for “controllable anonymity” (可控匿名) however, as a fully anonymous digital currency would make it impossible for the Chinese authorities to scrutinise illegal activity such as money laundering, terrorist financing and tax evasion.
“The central bank digital currency’s anonymity is limited anonymity that has risk controllability as its precondition,” said Mu. “A fully anonymous central bank digital currency is not feasible.”