The head of the People’s Bank of China (PBOC) Digital Currency Research Institute, Mu Changchun, reportedly said that “controllable anonymity” remains at the core of China’s digital yuan design. That is, privacy will only apply to end users when they transact among themselves while the details of those transactions remain visible to the central bank and regulators. He also has said a “completely anonymous central bank digital currency (CBDC) is not an option” based on international consensus. Any design that doesn’t satisfy anti-money laundering, anti-terrorism financing and anti-tax evasion purposes will be simply vetoed.
The wallet with the weakest know-your customer (KYC) strength is an anonymous wallet, which can be opened with only a mobile phone number. Such wallets, which can be opened with just a mobile phone numbers are completely anonymous to the PBOC and various operating agencies. However, this type of wallet will the lowest balance and daily transaction limit, which can only meet the daily needs of small payments. To make large payments , the wallet needs to be upgraded, and the wallet balance and payment limit will increase as the KYC intensity increases.
Recent payment surveys indicate that the share of cash transactions in the euro area has decreased. This, together with ongoing digitalisation in retail payments, might have been expected to lead to a decrease in the demand for cash. However, this reduction in demand has not occurred. In fact, the number of euro banknotes in circulation has increased since 2007. This seemingly counterintuitive “banknote paradox” can be explained by demand for banknotes as a store of value in the euro area coupled with demand for euro banknotes outside the euro area.
Central Bank of Nigeria (CBN) Deputy Governor Adamu Lamtek reportedly said that the central bank had not banned Nigerian residents from buying, trading, or selling crypto-assets, but was trying to protect the banking sector from crypto-asset activities. The statement follows the CBN announcing last month that it had placed a ban on all regulated financial institutions from providing services to crypto exchanges in the country.
* The views expressed herein are those of the author and should not be attributed to the International Monetary Fund, its Executive Board or its management.