China to start paying workers by digital yuan
BEIJING, CHINA — Chinese cities are increasingly adopting the digital yuan, with public sector employees in Changshu set to receive their salaries in the central-bank-backed digital currency.
According to a statement, the government hopes that this move will encourage wider adoption of the currency in the consumer market.
Digital yuan salaries are deposited directly into digital wallets, with government agencies and banks only needing to register employees’ names and cellphone numbers to process payments. This approach is also cost-effective, decreasing administrative costs compared with direct bank account deposits.
The digital yuan is also expected to prevent illegal cross-border transfers of funds and money laundering, which would benefit the People’s Bank of China (PBOC) in its fine-tuning of monetary policy.
However, the digital yuan has yet to gain much circulation, with only 13.61 billion yuan (US$1.9 billion) of the currency at the end of 2022, accounting for just 0.13% of all yuan in circulation.
The lack of popularity is due to people preferring mobile payment services like WeChat Pay and Alipay. Chinese residents also believe that the digital yuan replicates smartphone payment platforms offered by the private sector.
The PBOC stated that they are looking to make digital yuan payments available in areas with poor wireless connections, as well as more smartphone models compatible with the feature. The PBOC also aims to have wearable devices and smartcards compatible with the digital yuan.
The province of Jiangsu, specifically its local bank, is already paying its head office and branch employees with the digital yuan. At the same time, the city of Ningbo paid 557 public employees, including those in the finance department, in part using digital currency.
