The digital fiat currency from China’s central bank is not a tactic to gain full control over individuals’ personal information, the head of People’s Bank of China’s (PBOC) Mu Changchun said at an event on Tuesday, pledging that it will allow users to retain anonymity in their transactions, Reuters reported.
Why it matters: Experts have argued that digital fiat currencies could give the central bank more monetary policy control and that its activities could be more easily monitored than payment methods such as cash.
Details: The PBOC said that the digital fiat currency is “not seeking full control” of information from its citizens. The central bank-issued digital currency is designed to be a substitute for coins and paper money.
- “We know the demand from the general public is to keep anonymity by using paper money and coins,” said Mu during the panel discussion at FinTech Festival in Singapore on Tuesday. “We will give those people who demand anonymity in their transactions,” Mu added.
- Mu also said the central bank intends to balance “controllable anonymity” with anti-money laundering and counter-terrorist financing efforts as well as monitoring criminal activities such as tax evasion and online gambling.
Context: The central bank said the digital currency will not rely on pure blockchain architecture and that the system will implement real-name verification.
- The government has eagerly promoted its digital currency electronic payment (DC/EP) system over the past five months. State-run media published a story (in Chinese) on Monday, calling bitcoin “the first successful application of blockchain.” However, the author implied that bitcoin would not be able to compete with the central bank-issued digital currency because of the cryptocurrency’s instability.
- Earlier this month, Mu said that China’s digital yuan holders would not receive interest payments, and thus there will be no implications for inflation or monetary policy.