Yi Gang talks about the central bank's digital currency: Anonymizing personal sensitive information so that it is invisible to third parties

On October 31, the central bank’s website released Governor Yi Gang’s speech at the “2022 Hong Kong Fintech Week” event . The full text is as follows

Dear guests, ladies and gentlemen:

Hello everyone!

Thank you for the invitation from President Yu Weiwen. I am very happy to join you in participating in the "2022 Hong Kong Fintech Week" online. I would like to take this opportunity to share my personal views on central bank digital currency (CBDC).

In the context of the digital economy, the development of CBDC will help meet the public's demand for legal tender more effectively. In recent years, CBDC has received increasing attention. According to the latest survey by the Bank for International Settlements, 90% of the 81 monetary authorities surveyed are developing CBDC. In July this year, the Bank for International Settlements, the International Monetary Fund and the World Bank jointly released a report entitled "Central Bank Digital Currency for Cross-Border Payments", emphasizing that CBDC has the potential to improve cross-border payment efficiency, reduce cross-border payment costs, and increase cross-border payment transparency. At the same time, there are still some issues worthy of attention in the practical application of CBDC. Among them, privacy protection is one of the issues we attach the most importance to.

Digital RMB (e-CNY) is a digital currency issued by the People's Bank of China, mainly positioned as cash in circulation (M0). The development of digital RMB is mainly to meet domestic retail payment needs, improve the level of financial inclusion, and improve the efficiency of the central bank's currency issuance and payment system.

When designing the digital RMB, we use a "two-tier operation" and "controllable anonymity" approach to protect personal privacy while maintaining financial security. Specifically, in the digital RMB operating system, the central bank, as the first layer, implements centralized management and only handles cross-institutional transactions, not personal transaction information; designated operating institutions, as the second layer, collect personal information in accordance with the "minimum and necessary" principle and provide digital RMB exchange and circulation services to the public.

The People's Bank of China strictly abides by the relevant laws and regulations on consumer privacy protection, and ensures the security of personal information through advanced technical means and strict management mechanisms. Transaction data is encrypted and stored. Personal sensitive information is anonymized, and third parties cannot see this information transaction. Without full legal authorization, no unit or individual may query or use relevant information. At the same time, four types of wallets with lower limits and quasi-account "hard wallets" support small anonymous transactions both online and offline. It should be emphasized that we will continue to provide physical RMB cash services to fully meet the needs of the public.

We recognize that anonymity and transparency are not black and white, and there are many subtleties that need to be carefully weighed. In particular, we need to strike a delicate balance between protecting individual privacy and combating illegal activities.

Currently, the People's Bank of China is cooperating with the Hong Kong Monetary Authority and other monetary authorities on CBDC. We hope that such cooperation can better serve the needs of the international and domestic markets and help consolidate Hong Kong's position as an international financial center. Looking ahead, we are willing to strengthen cooperation with various monetary authorities and international institutions on CBDC.

Thank you everyone!