Legal Blueprint for Digital Yuan Needed, Says ICBC’s Wang Jingwu

It’s time for China to frame a legal blueprint for the digital yuan that clearly defines and outlines acquisition, use, risks, privacy, control and other details that clarify how it will operate nationwide, according to a state bank official on Monday (March 7).

Wang Jingwu, Vice President and Chief Risk Officer of Industrial and Commercial Bank of China, who is also Deputy to the National People’s Congress, penned a white paper in the China Financial Journal calling for a draft of new laws and regulations surrounding the digital yuan, which is also known as the digital renminbi or digital RMB.

“At present, the digital renminbi is not regulated at the level of laws and regulations, and there is a lack of legal guarantees about the acquisition, use, risk prevention and control of digital renminbi. With the expansion of the circulation of digital renminbi, it is urgent to provide solid protection through legislation,” Jingwu said.

See also: China’s Digital Yuan Wrapping Up its Olympic Test Run

Privacy protection is an area that still needs clarification, Jingwu said, pointing out that the People’s Bank of China (PBoC) can track a digital yuan transaction chain from issuance to circulation. Operating agencies, too, can track the chain on a certain level. 

Jingwu is calling for China to “clarify the boundaries of the digital renminbi privacy protection” and emphasizes that any personal data the PBoC holds “can only be used for national security purposes.”

Read more: China’s X-Border CBDC Ambitions Will Bring Digital Yuan to Broader Global Stage

The legal attributes of the people’s renminbi should be amended to illustrate that the digital yuan is legal tender, and the compensation of either is the same, according to the report. The circumstances under which the digital yuan can be turned away for payment due to technical issues also needs to be outlined.

The legal status, rights, and obligations of parties involved in the distribution of digital yuan — PBoC, commercial banks, merchants, and users — should also be clarified in the legislation because it is “completely different from the issuance of banknotes and coins.” The clarification is necessary to “ensure the stable operation of digital renminbi.”