- Changshu had already been using the digital yuan for various payments and subsidies.
- Some of the beneficiaries exchange the e-CNY for physical yuan.
The Chinese city of Changshu, in the east of the Asian giant, will begin to pay the salaries of civil servants and public administration workers with the digital currency of the central bank, the digital yuan (e-CNY), in an attempt to promote its use.
According to what was revealed by the financial newspaper Shanghai Securities Journal, the payments will begin to be made next May and will apply to a large part of the city’s workforce.
The city, which depends on the city of Suzhou in the eastern province of Jiangsu, is home to no less than 1.5 million people.
The measure of paying in e-CNY will also impact school teachers, health personnel, technicians, journalists from government media and workers of State companies that work in the city.
In Changshu, the digital yuan is already circulating and they don’t know how to use it
Although the payment in digital yuan for public workers is estimated for a few weeks, in the city of Changshu, payments were already being made with e-CNY.
According to the South China Morning Post, the entity has used the digital yuan since June 2022 to make overtime payments to some 4,900 employees of state-owned companies. The sum of these remunerations amounts to 2.5 million yuan.
In addition, the digital yuan has been used in that city for subsidies and other payments to technology companies, transport companies and the workers of the provincial government of the Chinese entity of Suzhou.
A public school worker in Changshu told Reuters he was receiving the transportation allowance in digital yuan. This is from October of last year. Two other state employees from Suzhou commented that they had been receiving e-CNY as salary for several months.
But none of those consulted by the agency say they know how the digital yuan works, so they proceed to exchange them for physical renminbis as soon as the e-CNY is deposited.
A doctor working at the Suzhou Hospital, surnamed Yang, said he does not know how to use the digital yuan. He also said that there are no shops or businesses where he can use them.
“To be honest, no merchant around me receives e-CNY,” he said. “Once I receive my salary in e-CNY, I always immediately convert it to the traditional yuan,” she said.
Another step to massify the use of the Chinese CBDC
With the measure to pay public workers in Changshu in digital yuan, China takes another step in its attempt to massify the use of its CBDC. This is one of the most advanced central bank digital currencies yet, although its adoption is still growing.
Since 2014, the Asian giant has been working on the creation of the digital yuan. In 2020, the pilot test for the use of the currency began in several Chinese cities. Among them, Beijing, Hong Kong, Suzhou, Xiongan, Shenzhen and Chengdu, as reported by CriptoNoticias.
Three years later, the pilot was expanded to 17 provinces, with several platforms accepting the digital yuan, as the Central Bank of China reported in early February.
According to the Chinese government, the digital yuan will protect the privacy of users. This is because electronic payment platforms will not obtain your data. However, being a centralized instrument, the central bank will have access to said information, as well as to all the transactions that are executed with the CBDC.
The director of the Chinese monetary entity himself recognized this in March 2021. At that time, he said that the e-CNY cannot be totally anonymous. The reason is compliance with international regulations against money laundering and terrorist financing.
The opposite of CBDCs (and all centralized money) is bitcoin (BTC), the first cryptocurrency. This asset enhances the protection of users’ privacy. It is due to its technology that avoids the intervention of a trusted third party for transactions. China has assumed it as such and that is why it has tried to ban it at least seven times, as reported by Market Times.
