Digital Yuan Will Break Big Data Monopolies, Replace All Forms of Traditional Money, Wang Yongli says
A former senior executive with one of China’s big six state-owned banks has highlighted the major impacts that the digital yuan will have on the functioning of the Chinese monetary system.
Wang Yongli, formerly the deputy-president of the Bank of China, said that the digital yuan is characterised by “limited anonymity,” which means the payments data of consumers will be off-limits to vendors and third party payments providers, and only made available to government authorities for the purpose of the investigation of illicit transactions.
This stands in marked contrast to the situation at present, under which payments platforms are capable of accessing the information of both parties to transactions.
“The main expression of limited anonymity lies in the concentrated placement of all digital yuan user information and all transactions data with the central bank, giving it a more complete set of big data than all of today’s commercial banks, third party payments organizations and online platforms,” said Wang.
“This is likely to have a major role in the breaking of data monopolies.”
Wang made the remarks on 21 November at the 2020 “Understanding China” International Forum in Guangzhou.
Wang points out that the Chinese central bank’s unified management of the digital yuan could also lead to the replacement of all forms of traditional money.
“The concentration of digital yuan user information and transaction data with the central bank will form a ‘single ledger’ for all of society’s digital yuan at the central bank,” said Wang.
“At the same time, the basic accounts of the central bank and the operational accounts of commercial institutions will co-exist and be inter-linked within the financial system.
“This can enable the digital yuan to replace all traditional money to the greatest extent possible – not just cash, but also including the extension of loans and the purchase of bonds by commercial banks.”
As AZCoin News reported, Xi Jinping, the president of China told G20 meeting attendees last week that the group should adopt an “open and accommodating attitude” on central bank digital currencies (CBDC).
“The G20… needs to discuss developing the standards and principles for CBDC with an open and accommodating attitude, and properly handle all types of risks and challenges while pushing collectively for the development of the international monetary system,” Xi said.
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