In view of China’s ongoing test phase of the Digital Yuan, a senior Chinese state bank official has emphasised on the need for new laws and regulations to alleviate privacy concerns and pen down how it operates. Wang Jingwu, Vice President and Chief Risk Officer, Industrial and Commercial Bank of China, pointed out that the People’s Bank of China (PBoC) can track a Digital Yuan transaction chain from issuance to circulation. Operating agencies, too, can track the chain on a certain level.
Penning down a whitepaper (via Bloomberg) in the China Financial Journal, Jingwu, who is also Deputy to the National People’s Congress, called for a draft of new laws and regulations surrounding the Digital Yuan, which is also known as the Digital Renminbi or Digital RMB.
“At present, the Digital Renminbi is not regulated at the level of laws and regulations, and there is a lack of legal guarantees about the acquisition, use, risk prevention, and control of digital renminbi. With the expansion of the circulation of Digital Renminbi, it is urgent to provide solid protection through legislation,” Jingwu said.
The new law should clearly define the duty of the central bank to protect users’ privacy and make sure their information is only accessible for the purpose of protecting national security, Jingwu claims.
The legal status, rights, and obligations of parties involved in the distribution of the Digital Yuan, namely, the PBoC, commercial banks, merchants, and users — should also be clarified in the legislation, believes Jingwu since it is “completely different from the issuance of banknotes and coins.” The clarification is deemed necessary by the executive to “ensure the stable operation of Digital Renminbi.”
At a press event in January, Zou Lan, head of financial markets at the People’s Bank of China (PBoC) the central bank’s Digital Yuan wallet was one of the fastest-growing apps in China by number of installs. Zou Lan also mentioned that about one-fifth of the population, by then, had already set up e-CNY wallets and that the country had already seen CNY 87.5 billion (roughly Rs. 1,07,765 crore) worth of transactions have been made using the digital fiat currency.
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