April 27, 2023
By Anjali Kochhar
As per reports from local media, a city located in the eastern part of China is intending to compensate its public sector staff solely with digital currency.
Changshu, a city housing a population of 1.5 million in Jiangsu province, will initiate payments to government officials and individuals working for public organizations using the digital yuan from the upcoming month, says the Shanghai Securities Journal, which is linked with the state-run news agency Xinhua.
In addition to this, the decision will have an impact on various professionals such as school teachers, healthcare workers, technicians, journalists employed by official media agencies, and individuals working for state-run enterprises.
This move is a significant measure aimed at encouraging the use of the digital currency, which is also recognized as e-CNY.
Since 2014, Beijing has been exploring the possibility of developing a sovereign digital currency, and in 2020, the first trials were conducted in pilot cities including Shenzhen, Suzhou, Xiongan, and Chengdu.
China has been making active efforts to promote the use of its centralized digital currency, and even considers it a potential tool to challenge the dominance of the US dollar.
However, after three years, there are still many obstacles to overcome, such as the limited ability to process transactions and the general public’s preference for popular digital payment platforms like WeChat Pay and Alipay, which is owned by Alibaba, the parent company of the South China Morning Post.
Local governments have been attempting to encourage the use of digital currency by persuading businesses and public utilities to accept it. Some have also conducted small-scale trials to pay government subsidies using the digital currency. Changshu has been using digital currency since June of the previous year to pay overtime to about 4,900 state enterprise employees, worth approximately 2.5 million yuan (US$363,000).
The city has also utilized the digital currency for a few subsidies, including payments to high-tech firms, transportation for local government staff, and housing expenses.
In February, the Jiangsu provincial government unveiled a plan to broaden the use of the digital yuan by 2025, including its usage in government procurement, tax payments, social security, education, and healthcare expenses.
It is not yet clear if the Changshu initiative will be expanded to other regions of the province. Beijing has stated that the digital yuan will safeguard people’s privacy by denying e-payment platforms access to transaction data. However, it will give the government real-time information on all transactions by individuals and corporations, which has caused concern among foreign analysts.
The announcement has generated a lot of buzz online. Some online users claimed that compensating civil servants with digital currency could help to deter corruption by officials, while others questioned whether older people would be able to adapt to this technology.
About the author
Anjali Kochhar covers cryptocurrency stories in India as well as globally. Having been in the field of media and journalism for over three years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.