At the Hong Kong Fintech Week event, Yi Gang, governor of the People’s Bank of China, outlined progress and gains in the nation’s adoption of its central bank digital currency.
In his speech, he stated China’s stablecoin could operate as a cash alternative in the country, adding privacy protection was “one of the top of the issue on our agenda.”
The news comes after China’s sovereign cryptocurrency launched in 2019, leading to widespread pilot programmes and adoption at retail stores nationwide, namely via its “red envelope,” or hongbao offering.
Authorities in Beijing later expanded the pilot programme to provinces with larger populations and later, noted total CBDC transactions surpassed $14 billion in the third quarter this year.
Introducing E-CNY
Yi explained China’s national cryptocurrency, E-CNY, could facilitate a two-layer payment system with anonymity for users. The tier-one option supplies the CBDC to authorised operators with institutional data. Tier-two options collect essential personal data for exchanging and circulating public services.
Additionally, China’s central bank would encrypt and store data with “managed-anonymity” and would not share data with third-party entities, Yi added.
The cryptocurrency would “meet the needs of domestic retail payment, enhance the development level of inclusive finance, and improve the efficiency of the currency and payment system.”
The bank would also facilitate “small-amount soft wallets and hard-wallets” for limited anonymous transactions “both online and offline,” Yi explained.
“Legitimate demand” for paper cash for fully anonymous payments would “be met at all times,” he added.
Speaking further about security, he concluded: “It is also important to keep in mind that anonymity and full disclosure are not as simple as black and white […] We must strike a delicate balance between protecting privacy and combating illicit activities”
The event is taking place 31 October to 4 November and has rallied members of the fintech community. Some of the region and world’s top thought leaders, executives, government officials, and experts to discuss the future of the special administrative region’s position in the global fintech industry.
