UK intelligence raises concerns about the digital yuan

The head of the Government Communications Centre (GCHQ), one of Britain’s intelligence agencies, Jeremy Fleming warned of potential negative consequences of the global spread of China’s CBDC for other countries, according to the Financial Times.

GCHQ is responsible for conducting signals intelligence and safeguarding information for government and military bodies.

In Fleming’s view, China’s existing CBDC could be used to collect information about users and, hypothetically, to monitor and filter transactions. This would have a negative impact on the ‘health of the financial system,’ the head of the intelligence service believes.

He noted that China is promoting a wallet for the digital yuan for use at the 2022 Winter Olympic Games in Beijing. This means that, in addition to local residents, foreign athletes and tourists will also be able to install the app to pay for goods and services during the event.

Fleming pointed to China’s rapid progress in launching the CBDC. In his words, no country has conducted such an advanced pilot in this field.

“China has gained an advantage, having invested a lot — both openly and covertly. And that is why it is beginning to exert real influence on how rules will operate in technological and digital contexts. We must craft our own response to all of this,” said the head of GCHQ.

He stressed the importance of international cooperation in establishing a framework for governing digital currencies. However, Beijing shows no such intentions, Fleming says.

Earlier in the U.S. Senate proposed banning American athletes from using the digital yuan during the Olympics.

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