China did not create a digital currency in order to spy on its citizens, a former head of the central bank’s digital yuan project said.
Speaking on May 30, Yao Qian, former director of the digital currency institute at the People’s Bank of China, said “helping the government see all transactions in real time was not the intention of the Chinese central bank,” according to Bloomberg.
Rather than monitoring the spending habits of its citizens, he said, the People’s Bank of China was seeking a balance between protecting users’ privacy and its ability to pursue crimes like money laundering, tax evasion, and financing terrorism.
Which is roughly what the digital currency institute’s current head, Mu Changchun said in November 2019. But, he described that goal somewhat differently.
While promising to "give those people who demand it anonymity in their transactions,” Mu qualified it more aggressively, calling for “controllable anonymity,” which has been called an oxymoron.
“We will keep the balance between the ‘controllable anonymity’ and anti-money laundering, CTF [countering the financing of terror] and also tax issues, online gambling, and any electronic criminal activities. That is a balance we have to keep, and that is our goal.”
Mu’s description of the kinds of activities that would cause the government to monitor spending was not only far broader, that last item — “any electronic criminal activities” — could have far-reaching consequences in a country that aggressively monitors the internet and digital communications for illegal anti-government comments.
Too Much Tracking for U.S.
Yao’s comments came in response to U.S. Federal Reserve Chairman Jerome Powell’s suggestion in late April that the digital yuan “really allows the government to see every payment for which it is used in real time.”
A digital currency offering the government that level of tracking capability, Powell said, “is not one that would work here.”
It would also be bad for the U.S. dollar’s status as the world’s reserve currency, Powell said. “That’s because of our rule of law; our democratic institutions, which are the best in the world,” he added.