In a groundbreaking move, the Chinese city of Changshu announced that it will pay civil servants in digital RMB, also known as digital yuan, starting May 2023. This decision aims to boost the adoption of China’s central bank digital currency (CBDC) and establish a robust digital RMB operation and management system by 2025.
Digital Yuan Payments for Public Sector Employees
The Changshu Local Financial Supervision Bureau and the Changshu Municipal Bureau of Finance jointly issued a notice. It states how all levels of civil servants within the city, including public service personnel, public institution personnel, and personnel of state-owned units, will receive their full salaries in digital RMB.
A staff member at a local hospital confirmed that the workforce would transition to digital yuan payments beginning next month. Employees can opt for digital yuan settlements through self-service terminals, making the process more efficient and convenient.
To promote CBDC adoption, Chinese city governments distributed over 180 million yuan ($26.5 million) worth of digital RMB during the Lunar New Year period on February 6. This giveaway aimed to increase the use of the digital currency among the public.
Jiangsu Province, where Changshu is located, launched a pilot program for digital RMB in the first quarter of 2023. This program aims to create an efficient and convenient digital RMB operation and management system by 2025.
Digital Yuan Faces Challenges in Hong Kong
Despite the Chinese government’s push for CBDC adoption, the digital yuan has faced resistance from Hong Kong residents. In the first four days following the launch of the digital yuan hard wallet, only 625 Hongkongers registered for the service.
This lack of adoption occurred even though the government subsidized a 20% discount for CBDC owners on purchases from 1,400 local vendors.
As Changshu becomes the first city to pay civil servants in digital yuan, it sets a precedent for other cities in China to follow suit. The adoption of digital RMB payments for public sector employees showcases the Chinese government’s commitment to advancing the use of CBDCs.
However, overcoming resistance from the public, particularly in areas like Hong Kong, remains a challenge. The success of this initiative in Changshu will serve as a crucial benchmark for the future of digital yuan adoption across the nation.
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