More than 50,000 residents of China’s Shenzhen city are participating in the digital yuan pilot scheme launched by the local government to test the developing technology. However, as plans to issue a central bank digital currency (CBDC) advance, there are also increasing concerns among citizens about how the system works and what permits it requires to access the personal information of their users.
Amid the secrecy that the Chinese government has maintained regarding the development of the digital yuan, various media outlets in that country have revealed that some citizens have concerns about the privacy of the system. “I use cash to buy things at the store and no one else will know who bought it. But the renminbi [yuan] digital must be linked to the mobile phone number, so that it can be identified by technical means “, confessed a citizen to a journalist.
However, the authorities linked to the project have indicated that privacy and anonymity should not be issues that generate concerns among citizens who use the digital yuan. Along those lines, Mu Changchun, director of the China Central Bank’s Digital Currency Research Institute, spoke at a conference last month about the differences between the digital RMB app, Alipay, and WeChat Pay.
From Mu Changchun’s perspective, the digital yuan differs from other popular Chinese payment systems because does not require internet connection and thus satisfies the need for anonymity and can replace cash payments. At the same time, the use of the digital yuan does not charge transaction fees, so it is cree which will displace other payment methods.
For Changchun, the digital yuan can indeed maintain the main value attributes and characteristics of cash and could protect anonymity. “As long as you do not commit crimes and want to consume something that you do not want others to know, the digital renminbi can also protect privacy,” the official said, as China’s digital media reported.
Other publications They state that, compared to other payment software, such as WeChat, in effect the digital yuan has a function that will allow payments without the need for an internet connection or telephone signal, but this feature has not yet been activated. “As long as the mobile phone has electricity, two mobile phones can touch each other to make transfers with the digital yuan,” explains the note, adding that this feature of making a payment without the need for internet is only found in cash payment. Then clarify that behind the digital yuan is the will of the state, which is different from the optional nature of other existing methods.
Digital yuan vs cash payments, what is more private?
As the pilot plan for the digital yuan progresses, signs are emerging to show how it will work. In fact, the Shenzhen government already made some rules clear during the activation of the test plan. In this regard, he pointed out that citizens have until October 18 to use the 200 yuan allocated to test the platform, or else the amount will be collected again by the RMB digital system.
On the other hand, Fan Yifei, deputy governor of the central bank, wrote an article in mid-September in which he points out that the digital yuan is an alternative to legal tender and therefore no institution or individual may refuse to accept it provided the conditions are met.
Then, the digital yuan will not only be mandatory, but the central bank would be limiting its use to citizens according to some considerations related to private data. In that sense, some classification levels would be being established according to which wallets registered with phone numbers will only have access to micropayments. «Wallets registered with identity documents and a bank card will have access to a higher level. If the citizen goes to the bank to sign, it is possible that there is no limit for payments, “reported the Chinese media, although it is not clear how these supposed levels of classification would work.
Industry experts consulted by the country’s publication media point out that, although the central bank emphasizes that the digital yuan can satisfy anonymous payment needs, not everything is clear about it. Judging by the various information currently being disclosed, The use of the digital currency should at least depend on personal information such as telephone numbers. It also does not have an anti-tracking system, so there is no reason to think that it will become an alternative that will offer benefits similar to those offered by cash payments today when it comes to protecting privacy and personal data.
How reported CriptoNoticias, this week the Central Bank of China called for the implementation of the digital Yuan to be accelerated. The request was made days after a group of central banks – of which China is not part – produced a document specifying how national digital currencies should be designed.
In any case, the plan in which focuses the Asian country is to beat the United States in the technological war that has faced both nations for some time. To this end, China sets itself the goal of becoming the first country to issue its digital currency as part of its effort to internationalize the yuan and reduce global dependence on the dollar-based economic system.