China’s digital yuan: Beijing vows stronger laws, clear limits on monitoring e-CNY wallets

Mu Changchun, head of the central bank’s digital currency research institute, says user data will only be tracked if a law is suspected of being violated

e-CNY users can open four types of digital wallets, with daily transaction caps corresponding to how much personal information a user provides

Reading Time:2 minutes

Worries have emerged about the government’s ability to track e-CNY data. Photo: Simon Song

Published: 5:30pm, 10 Oct 2022Updated: 6:29pm, 10 Oct 2022

China is moving to allay public concerns about data protection and privacy in using the digital yuan, vowing to implement clear laws concerning the monitoring of digital wallets.

The country is a forerunner in the development of a sovereign digital currency, known locally as the e-CNY, rolling out trials in 23 cities, including Beijing, Shanghai and Shenzhen since late 2019.

Central bank data shows about 4.6 million merchants now accept the digital currency and more than 261 million digital wallets have been opened. Transactions in pilot regions totalled 83 billion yuan (US$11.6 billion) by the end of May.

Despite the progress, worries have emerged about the government’s ability to track user information and the potential for competition with long-established digital payment platforms, Alipay and WeChat Pay.

To ensure managed anonymity, we need to strengthen legislation and improve top-level design

Mu Changchun

“To ensure managed anonymity, we need to strengthen legislation and improve top-level design,” Mu Changchun, head of the People’s Bank of China (PBOC) digital currency research institute, wrote in the September issue of Modern Bankers magazine.

User information can only be analysed and monitored when transactions are suspected of violating laws concerning money laundering, terrorist financing or tax evasion, Mu said.