Chinese city pays civil servants in cryptocurrency

Blockchain Technology

Monday, April 24, 2023 14:04 (GMT+7)
14:04 4/24/2023

A city government in China started paying civil servants in CBDC in May.

e-CNY is used to pay salaries instead of yuan. Photo: Reuters .

According to STNC , some government agencies in Changshu City, Jiangsu Province, China are about to pay their employees in cryptocurrency. Civil servants working at government agencies in the city will receive their May salary in the form of digital yuan (e-CNY). This change will affect teachers, medical staff, and many other people working in public organizations.

This is a big step for China in testing and promoting the use of digital currency issued by the state bank. According to SCMP , China began researching CBDC (Central Bank Digital Currency) in 2014. The system has been running tests since 2020 in Shenzhen, Suzhou, Chengdu...

China has been developing the digital yuan since 2014. Photo: Reuters.

After 3 years, e-CNY still has many limitations. The digital currency is rarely used in daily transactions. At the same time, users in this country have the habit of using e-wallets with digital payment functions such as WeChat Pay and Alipay.

Authorities in many major cities are trying to promote the new form of payment. They are encouraging businesses and government agencies to accept the digital yuan. In some limited trials, e-CNY has been used to pay government subsidies.

Jiangsu Province is testing the use of the digital currency for subsidies, payments to high-tech companies, and public employees’ travel and housing expenses. In February, the provincial government announced plans to expand the use of CBDC by 2025. Accordingly, the e-CNY will be used for public spending, social security,education , health care, and tax payments.

The Chinese CBDC developer believes the new solution will help improve user privacy. Online trading platforms will no longer access personal information and sensitive data when making payments. However, it raises concerns that authorities can easily collect transaction information of users and businesses.

So far, CBDC payments have been tested primarily internally in China, and experts say the escalating political turmoil may have spurred the rapid development of the e-CNY in the country.

In December 2020, residents of Suzhou received a large amount of CBDC rewards. More than $3 million worth of digital currency was given to 10,000 residents to experience the new form of payment.

CBDCs are essentially stablecoins, which are crypto assets that are pegged to a fiat currency. However, instead of being issued by a private company or decentralized network, they are controlled by a country’s central bank. According to Decrypt , more than 100 countries are currently researching or testing the technology.

To keep blockchain from being misunderstood

Blockchain is still a very new field, despite its potential to transform many industries. Most observers associate blockchain with cryptocurrencies and the many scandals that have plagued the market, but the technology is much broader.

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Spring Sang

Payroll Cryptocurrency CBDC e-CNY China