A Chinese City Pays Salaries in Digital Currency

According to the Shanghai Securities Journal, the city of Changshu in Jiangsu will start paying civil servants and those working in public institutions in digital yuan from next month. This includes teachers, medical staff, technicians, journalists at state-run media outlets, and employees of state-owned enterprises.

The move marks a major step forward in the use of electronic yuan, or e-CNY.

China wants to promote the use of digital currency. (Photo: Xinhua)

China has been researching digital currency since 2014 and conducted its first trials in Shenzhen, Suzhou, Xiong'an and Chengdu in 2020. The country wants to promote the use of e-CNY, but has faced many obstacles in the past three years. The public still prefers popular digital payment platforms such as WeChat Pay and AliPay, while the scope of application of e-CNY is limited.

The local government wants to promote the digital currency by encouraging businesses and public service providers such as electricity and water to accept e-CNY. Changshu will use e-CNY to pay 2.5 million yuan in overtime pay to about 4,900 employees at state-owned enterprises starting in June 2022. The city will also use it to pay for high-tech companies, employee travel expenses, and rent.

In February, Jiangsu rolled out a plan to expand the use of e-CNY by 2025, including in government procurement, tax payments, social security,education and medical expenses.

Beijing says the digital yuan will help protect people’s privacy because digital payment platforms will no longer have access to transaction information. However, it will provide real-time information on all transactions made by individuals and organizations.

The news has become a hot topic on Chinese social media, with some users saying that paying civil servants in digital currency would likely reduce corruption, but others questioned whether seniors would be able to adapt.

So far, the e-CNY has been used mainly domestically. However, Darryl Chan Wai-man, deputy director of the Hong Kong Monetary Authority, said that Hong Kong is working with the People’s Bank of China to pilot the use of e-CNY for cross-border payments.

(According to SCMP)

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