China Civil Servants to Receive Digital Yuan as Payment
The Chinese city of Changshu has announced that all civil servants in its jurisdiction will be paid their full salaries in digital yuan starting May 2023.
This move is part of China’s pilot program to establish an efficient and convenient digital RMB operation and management system by 2025. Civil servants, including those in public service, public institutions, and state-owned units at all levels, will be compensated in digital yuan. The city of Changshu is located in the Jiangsu province, which previously initiated a pilot program for the digital yuan in Q1 2023.
According to a notice issued by financial authorities in the city, employees can opt for digital yuan settlements through self-service terminals. A staff member at a local hospital confirmed that the workforce would receive payments in digital yuan starting next month.
The move to pay salaries in digital yuan comes after Changshu launched a CBDC pilot program in Q1 2023. The authorities in Changshu announced that by 2025, the city aims to develop an efficient and convenient digital RMB operation and management system.
China’s CBDC rollout has expanded to 26 different regions in 17 of 23 provinces as of April 2023. Taicang, not far from Changshu City, was the first location with a public institution to fully offer wages in digital yuan, a milestone reached in July 2022.
In addition, Changshu City has previously promoted the digital yuan’s use in certain situations, such as paying for public transport, medical expenses, groceries, and utilities like gas and water.
What are the benefits of the digital RMB
The digital RMB aims to be cheaper and faster than existing financial transactions, and it could help companies, especially small and medium-sized enterprises, receive financing easier, as banks could have a better knowledge of how they operate.
The digital RMB could also be used to reduce money laundering, gambling, corruption, and terror financing, and may improve the efficiency of payment platforms. Additionally, the digital RMB could provide a cheaper and more efficient way for cross-border transactions, and it could help to promote the internationalization of the RMB.
What is the purpose of China’s pilot program for digital RMB
The purpose of China’s pilot program for digital RMB is to establish an efficient and convenient digital RMB operation and management system by 2025, and to build confidence in the digital yuan’s reliability and ease of use. The digital RMB aims to be cheaper and faster than existing financial transactions, and it is seen by some commentators as a form of Chinese government surveillance and control over users and their financial transactions.
The People’s Bank of China (PBOC) has stated that the goal of launching digital RMB is to partially replace cash, but not bank deposits or privately run payment platforms, and it could be used to reduce money laundering, gambling, corruption, and terror financing, and may improve the efficiency of payment platforms.
How does digital RMB reduce money laundering and corruption
The digital RMB could be used to reduce money laundering and corruption by allowing the government to monitor all financial transactions. The digital RMB could also help to reduce illegal cash flows and tax avoidance. The People’s Bank of China (PBOC) has stated that digital RMB could be used to reduce money laundering, gambling, corruption, and terror financing.
By using digital RMB, the government could have a better knowledge of how companies operate, which could help to reduce corruption. Additionally, the digital RMB could provide a cheaper and more efficient way for cross-border transactions, which could help to reduce the use of cash in illegal activities.
