The governor of the People’s Bank of China (PBOC), Yi Gang made some comments about the use of China’s CBDC (e-CNY) at the just concluded FinTech week held in Hong Kong. Per his press release containing excerpts of his speech at the event, he shed light on the CBDC’s involvement in the drive to promote faster, cheaper, and more transparent cross-border payments.
He claimed that there are still some challenges in the use of the e-CNY as regards to privacy protection. According to him, these challenges can be resolved by adopting a two-tiered system.
At tier one, the PBOC will be solely responsible for managing inter-institutional transaction data and providing e-CNY to authorized operators while only the authorized operators collect the personal information needed for their tier two exchange and circulation services to the general public.
Governor Gang also highlighted that the use of anonymity is not so straightforward as there are many processes to be considered and therefore there must be a balance between privacy protection and fighting fraudulent activities. He further hinted that the PBOC is currently working with Hong Kong Monetary Authority on CBDC to serve both domestic/global industries and strengthen Hong Kong’s position as a major financial hub.
The PBOC complies fully with all laws and rules governing consumer privacy protection and ensures personal information security using cutting-edge technology and stringent oversight. Before being saved, data associated with transactions are encrypted.
Sensitive client information is de-identified for parties not involved in transactions. Both organizations and people are prohibited from carrying out random research or using information without clear legal authorization.
The Advancement of CBDCs
Central Bank Digital Currency, or CBDC, refers to the digital version of a country’s fiat currency. As a result, it is directly under the supervision of the nation’s central bank and is supported by both national credit and government authority.
A new round of testing the e-CNY began in August as the usage of CBDC became more widespread in China.
A news report has revealed that the digital RMB payment feature was made available by Guangzhou Public Transport. By generating a digital renminbi CCB wallet, passengers can participate in the trial program where they can pay for trips with digital renminbi payment codes through the digital renminbi app on 10 bus lines, including the Tourism and Sightseeing Line 1.
Similarly, the Reserve Bank of India (RBI) is beginning a wholesale trial program for trade settlement, confirming how widespread CBDC development remains a top priority for the majority of economies.
