Digital Yuan Not Intended as Surveillance Tool: Ex-PBOC Official

(Bloomberg) -- Monitoring the payments of citizens was never China’s motivation for developing a sovereign digital currency, a former central bank official said Sunday.

China began to develop the digital yuan to counter the impact of private payment platforms that have become increasingly popular, said Yao Qian, former director of the digital currency institute at the People’s Bank of China, during a panel at the International Finance Forum in Beijing.

Yao’s comments were a rebuttal to Federal Reserve Chair Jerome Powell, who said last month digital currencies such as China’s would not work in the U.S. because it would allow the government to “see every payment that’s used” in real time.

“Helping the government see all transactions in real time was not the intention of the Chinese central bank,” said Yao, who was the first director of the digital currency institute established in 2016. “It’s necessary for central banks to innovate the legal fiat money in the face of the tides of digitalization.”

The digital yuan needs to achieve a balance between protecting users’ privacy and cracking down on crimes such as money laundering, tax evasion and the financing of terrorism, said Yao, who is currently director of the science and technology supervision bureau at the China Securities Regulatory Commission.

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With assistance from Bloomberg