The head of the British spy is causing fears because of the Chinese digital renminbi

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China’s digital renminbi, which is being intensively promoted ahead of the Beijing Winter Olympics, risks becoming a tool for monitoring users and exercising control over global currency transactions, warned the director of the British intelligence agency GCHQ.

In an interview with the Financial Times, Sir Jeremy Fleming said that while digital currencies represent a “great opportunity” to democratize payment systems, the development of this new technology also poses a threat.

“If implemented incorrectly, it gives the enemy state the ability to monitor transactions,” he said. “It simply came to our notice then. . . so that they can control what is done in these digital currencies. ”

The spy chief spoke to the FT earlier this week from the London headquarters of the National Center for Cyber ​​Security, GCHQ’s defense arm, ahead of the announcement of a new cyber strategy.

This document, expected later this month, will serve as a blueprint to combat digital threats at a time when warfare is increasingly moving into cyberspace. Fleming said that GCHQ is “a hunter and gamekeeper” in this domain, in charge of protecting the country from attacks and strengthening offensive operations against opponents.

The agency, which has eavesdropping stations across the UK and abroad, works together with its more well-known sister services MI5 and MI6, specializing in domestic and foreign intelligence services. However, GCHQ’s digital expertise is in high demand because of what Fleming calls the growing “prominence” of technology in society.

Official Chinese mobile renminbi app on mobile phone © Florence Lo / Reuters

In fact, the threats have changed significantly since the agency’s historic role in World War II, when GCHQ code breakers deciphered Nazi communications from huts on a draft in Bletchley Park.

He said that China is now the “biggest strategic problem” facing the United Kingdom, and that it is expanding its spy operations and seeking control over the digital infrastructure. “China stole the march. . .[it’s]it invests a lot, openly and covertly, and that is because it is starting to make a real impact on the way road rules will work in a technological and digital context, ”Fleming explained. “We need to determine what our response is to all of this.”

The spy chief wanted to stress the importance of keeping the UK open to trade with Beijing and cooperating in areas such as climate change.

But he is concerned that this would prove “deeply intrusive” and could lead to an “erosion of sovereignty” if other countries collected large amounts of data on British citizens – how they work, shop, socialize and travel. Earlier this month Richard Moore, the head of MI6, suggested that China was exporting technology that allowed it to pursue a “network of authoritarian control” around the world and accused Beijing of trapping other countries in “data traps”.

Digital currencies could be one such trap 140 million individuals and businesses they have already applied to use the digital renminbi, according to the National Bank of China. “In context upcoming Olympics. . .China is using every opportunity to project its digital currency, and they hope that foreign visitors will use it in the same way as domestic visitors, ”Fleming said.

He hoped that Beijing would coordinate with international partners in agreeing on a regulation system for online currencies. Some countries and organizations have shown a “real thirst” for better dialogue on the issue, Fleming said, but stressed that he “does not yet see this withdrawal from China”.

Such an underestimation is typical of the 54-year-old GCHQ director, who is the most cautious and shy of the media out of three British spy bosses. His 28-year intelligence career began almost by accident when, after working briefly as an accountant in the city, he applied for a job at the Ministry of Defense.

It turned out to be a duty at MI5, where he later took part in responding to the terrorist attacks in London 7/7 and led security preparations for the 2012 Olympics. He was generally expected to take over as CEO of MI5 until the first position at GCHQ became vacant and he moved agencies to fulfill that role.

One of Fleming’s key responsibilities is to develop Britain’s cyber warfare capabilities. Sparring between states in cyberspace is a mystery business, and details of the UK’s own “offensive” cyber capabilities remain highly confidential.

Last year, ministers announced the establishment of a National Cyber ​​Forces , led jointly by the GCHQ and the Ministry of Defense, to target opponents online by blocking terrorist phone signals, disrupting servers and hacking enemy weapons systems. Headquartered in a village in Lancashire, power will, according to Fleming, be “a really important part of our cyber power. . . that’s how states compete. “

GCHQ headquarters in Cheltenham
GCHQ headquarters in Cheltenham © PA

Although Britain has publicly called out countries like Russia and China for hacking, Fleming declined to comment on how the UK is fighting in the cyber domain. “We need to put a little space between operations and conversations,” the spy chief said. “These abilities are deeply tested and properly monitored.”

The only known example of a British offensive cyber campaign was waged against Islamic State, at the height of the group’s attempts to form a caliphate across Syria and Iraq. The operation involved suppressing the group’s propaganda by destroying the physical IT infrastructure and limiting its strength on the battlefield by disabling drones.

As cyber technologies spread, not all threats come directly from traditional adversaries. Last month USA sanctioned The NSO Group, an Israeli spyware maker, following allegations that authoritarian governments used its software to monitor the phone of human rights activists and journalists around the world, including the editor of the newspaper.

Fleming described such use of NSO hacking capabilities as “completely out of it”, adding: “My personal view is that countries or companies that declare [technology] they are harmful in such an unfettered way and should not be tolerated. ”

GCHQ listening station in Bude in Cornwall
Post for listening to GCHQ in Bude in Cornwall © Kieran Doherty / Reuters

The United Kingdom has not followed the U.S. by sanctioning the NSO, but Fleming said he is “certain” that this is an issue the government will “want to scrutinize”.

In the short term, GCHQ is focused on tackling some of the consequences of the Covid-19 pandemic, from espionage aimed at stealing vaccine research to an increase in ransomware attacks caused by increased vulnerabilities to teleworking. Nearly 40 per cent of companies in the UK have suffered a cyber burglary or attack so far this year.

These growing threats gave his agency a much broader mandate. “The role of GCHQ is changing very fast,” Fleming said, acknowledging that the pace of evolution is among the “fastest… In our history.” [than espionage]”, he explained.

Part of this evolution is the recognition that intelligence agencies cannot do all their work with home-developed technology. As the FT reported earlier this year, GCHQ was a pioneer a new contractwith AWS, Amazon’s hand for cloud computing, to store confidential data for British spy agencies. Although Fleming declined to comment on the deal, it seemed open to future collaborations and partnerships with technology companies.

“It is not a viable model for British intelligence to shut itself off from some of the best, most innovative technologies in the world, which incorporate security,” Fleming insisted. “The world of technology is a global world and we have to play in that space.”

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