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The Chinese City of Changshu to Pay Civil Servants' Salaries in Digital Yuan Starting May 2023
Changshu, a city in China's Jiangsu province, has announced that all civil servants within its jurisdiction will be paid their full salaries in digital yuan starting next month. The decision was made to establish an efficient and convenient operation and management system by 2025.
The financial authorities in the city have issued a notice stating that civil servants, including those in public service, public institutions, and state-owned units at all levels, will be compensated in digital yuan. Employees will be able to opt for digital yuan settlements through self-service terminals.
Changshu is adopting digital yuan following a Q1 2023 pilot program in Jiangsu. However, Hong Kong residents have not responded well to China's push for CBDC adoption.
During the hard launch of the digital yuan wallet, only 625 residents had signed up in the first four days, despite a 20% discount on purchases from 1,400 local vendors subsidized by the government for CBDC holders.
Digital Yuan is Not Decentralized
The adoption of digital yuan for civil servant salaries in Changshu can be seen as a move towards the digitization of currency in China. However, it is important to note that the digital yuan is a centralized digital currency issued and controlled by the People's Bank of China, and it is not a decentralized cryptocurrency like Bitcoin or Ethereum.
China has a complex relationship with cryptocurrencies, with the government banning cryptocurrency exchanges and initial coin offerings (ICOs) in 2017. Since then, China has been exploring the use of blockchain technology and central bank digital currencies (CBDCs) as a means of digitizing its financial system. While the adoption of the digital yuan may signify a shift towards digital payments and currency, it is unclear whether this move will lead to a broader reintroduction of cryptocurrencies in China.