An eastern Chinese city will start paying state employees' salaries in digital yuan from May, the latest attempt to promote the use of digital sovereign currency in the country where payments are already increasingly cashless.
The city of Changshu in wealthy Jiangsu Province said it would start paying civil servants and people working for public institutions with the digital yuan starting in May, according to the state-run Shanghai Securities Journal. Digital currency-related stocks were among the gainers on Monday, thanks to the news report.
Changshu, a city with a population of 1.7 million, has experimented with digital currency since last year when the local government paid its subsidies to agricultural insurance, transportation allowances and part of government employees' salaries in digital yuan, according to the government.
The city paid 4,900 local employees in public services and state-owned enterprises a total of 2.54 million digital yuan ($368,458) between June and September in 2022, the state newspaper said, citing official data. The city government also issued CNY6 million digital yuan in subsidies to 40 high-tech companies in July, the Shanghai Securities Journal reported on Saturday.
Changshu's latest move came after Chinese authorities experimented with the use of the digital yuan in several wealthy Chinese cities, including Shenzhen, Suzhou and Beijing, where local governments offered free digital yuan for consumers to spend in a bid to popularize the government-endorsed currency.
China's central bank began its work on the digital currency, also known as digital currency/electronic payment, or DC/EP, in 2014. The central bank said the digital yuan is an extension of physical fiat money endorsed by the government. The promotion of the digital yuan was seen by many experts to be a possible tool to break the U.S. dollar's dominance in global payment.
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04-24-23 0641ET
