China will pay its public employees with digital yuan

The city of Changshu, in China’s east China’s Jiangsu province, is giving new impetus to the adoption of the digital yuan, China’s central bank digital currency (CBDC), by starting to pay public sector employees their salaries in digital yuan starting in May, according to an official report from the local government.

This measure will affect civil servants and employees of the public administration, state-owned companies, and public institutions in the city, such as schools, hospitals, libraries, research institutes, and media organizations.

This is the largest launch of the digital currency in China to date, and adds to efforts to popularize CBDC that have been taking place in other cities in the country since the cashless system was launched in 2020. Changshu, a city of 1.7 million people, has been experimenting with the digital yuan since October last year, using the digital currency to pay for transit subsidies, overtime to state employees, and subsidies to high-tech companies and costs of living place.

China has been a leader in the development of CBDCs among countries, and has been making efforts to boost the adoption of its digital payment system. Last January, the People’s Bank of China launched a wallet app on the Apple and Android stores that can be used in more than a dozen cities and regions that were testing the currency. In addition, private companies such as Alipay and Tencent, Chinese technology giants, have been pressured to incorporate the digital yuan into their payment mechanisms.

However, the digital currency has faced challenges, including limited ability to settle transactions, and some Chinese citizens who have been receiving digital yuan payments have reported difficulty finding places to spend CBDC in their daily lives. Despite this, the Changshu announcement has led to a rise in CBDC-related shares in the Chinese market, with companies including Global Infotech, Chutian Dragon, Newland Digital Technology, and Northking Information Technology all recording increases in their shares.

In addition, another city in Jiangsu, Xuzhou, has also announced plans to promote the digital yuan, becoming the second city in the province to experiment with the digital currency on a large scale. Some economic commentators believe that Western sanctions on Russia have accelerated China’s development of the digital yuan. Until now, the digital yuan has mainly been used domestically in China.

K. Tovar

Source: Diariobitcoin

(Reference image source: file)

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