China's digital currency will feature "controllable anonymity", which means transactions will be anonymous and personal information will be protected, while preventing potential illegal financial activities such as money laundering, terror financing and tax evasion, said a senior official from the central bank.

The testing of the digital RMB, or e-CNY, is ongoing.

"The protection of users' privacy by e-CNY is at the highest level among all of the existing payment tools," said Mu Changchun, head of the People's Bank of China's Digital Currency Research Institution, on Saturday.

Different from opening a bank account which requires real-name authentication, e-CNY can technically realize anonymous small-scale transactions. Based on the principle of "know your customer", users can open multiple digital wallets having different levels of maximum payment limit, the PBOC official said at the China Development Forum 2021 in Beijing.

This design can prevent suspicious risks of large transactions while protecting privacy, he said.

Users of the e-CNY could open an anonymous digital wallet through registering a mobile phone number, and any telecom operators should not disclose information about customers to the central bank, or other third-party institutions. "Therefore, wallets opened with mobile phone numbers are completely anonymous to the PBOC and various operating agencies," said Mu.

The e-commercial platforms which adapt payments of the e-CNY will not have access to personal information of the users, he added.

But for large transactions that may break laws, the central bank will provide clues to law-enforcing departments based on big data analysis. If any illegal activity happens, such as telecom fraud using e-CNY, its design which can chase the transaction process would help the people get their money back and protect their property rights, said Mu.