CHINA will fully respect privacy and protect personal information in using the digital yuan, its central bank’s head of digital currency unit said, as the country moves forward with tests of the currency also known as e-CNY.

Limited anonymity is a key feature of the digital yuan and only a limited amount of personal information is collected when people use digital yuan, and access to it will be restricted, Mu Changchun, head of the Digital Currency Institute at the People’s Bank of China, said Sunday.

The People’s Bank of China is a front-runner in developing and issuing a central bank digital currency (CBDC), which, in the case of the e-CNY, will be a traceable replacement for notes and coins.

Other central banks are looking at developing CBDCs to modernize their financial systems, ward off competition from cryptocurrencies such as Bitcoin and speed up domestic and international payments.

China’s efforts are among the most advanced globally, and the country has been running various trials and pilot schemes of different payment scenarios in recent years.

For normal transactions and purchases, neither the central bank nor the platforms that operate and convert digital currency will be able to get all the information about the trading, Mu said.

Authorities should only ask to use the data when it’s necessary to investigate transactions that are suspected of violating laws, he said.

Mu reiterated that the digital yuan has the highest level of privacy protection among existing digital payment tools. Still, he said it’s not proper for digital currency to be as anonymous as cash, since that would facilitate money laundering and other illegal behaviors. (SD-Agencies)