According to a report, the Chinese government will be increasing the number of government employees who will receive their salaries in the digital yuan. This move is in line with the country’s efforts to promote the adoption of the digital currency. The digital yuan, which is currently being trialed in several regions in the country, is expected to be rolled out nationwide in the coming years. This move by the Chinese government is expected to further accelerate the adoption of the digital yuan in the country.
Changshu City, located in Jiangsu Province in China, is set to roll out the use of the digital yuan for full salary issuance for public sector employees, according to a report by local media. This initiative will positively impact workers like doctors, teachers, and journalists, among others. The shift towards the use of central bank digital currency (CBDC) in the region is set to take effect from next month.
The use of digital yuan has been promoted in Changshu City in the past, primarily for public transport, medical expenses, groceries, and utility payments such as gas and water bills. As of this month, China has expanded its CBDC rollout to 26 different regions in 17 provinces. Taicang, located close to Changshu City, was the first location in China to offer wages fully in digital yuan, which was achieved in July 2020.
Citizens of Changshu City will now join the cities of Suzhou, Shenzhen, Xiongan, and Chengdu in the list of CBDC testing grounds in China. In December 2020, participants in the Suzhou pilot project were rewarded with a CBDC airdrop where $3 million worth of digital yuan was distributed among 10,000 residents.
CBDCs are digital tokens pegged to the price of a sovereign currency like the Chinese yuan or U.S. dollar. However, instead of being issued by commercial entities on decentralized networks, CBDCs are issued and controlled by a country’s government or central bank.
The use of CBDCs is growing globally, with 11 countries, including the Bahamas, fully launching their CBDCs. One hundred countries are currently piloting, researching, or developing the technology today, according to the Atlantic Council’s CBDC tracker.
The widespread use of CBDCs has raised concerns about potential abuse, loss of privacy rights, and market control in some regions. These debates are also gaining momentum in the U.S., where politicians, including the governor of Florida, have expressed worry over the potential dangers of CBDCs. In Hong Kong, regulatory crackdowns are pushing crypto enthusiasts to relocate to other regions, leading to the city’s reemergence as a potential hub for digital asset business.
The shift towards the digital yuan in China is part of a broader pivot towards financial technology across the country. With the use of CBDCs gaining wider acceptance worldwide, it appears to be only a matter of time before more countries follow suit.