Despite the Chinese government’s push for the adoption of the digital yuan, many workers are still hesitant to use it for their daily transactions.
What Happened: Sammy Lin, an account manager at a state-owned bank in Suzhou, receives her monthly salary in digital yuan. However, she, like many others, prefers to convert it into regular cash due to the lack of interest and limited usability, reported South China Morning Post.
“I prefer not to keep the money in the e-CNY app, because there's no interest if I leave it there,” Lin said.
Changshu, a city in Suzhou, began paying its public sector workers in digital yuan a year ago, followed by other employers. However, the employees are not using the digital currency directly due to concerns about privacy and its limited functionality.
Ye Dongyan, a researcher at the Cheung Kong Graduate School of Business in Beijing, highlighted the need to balance privacy and security, which has slowed the progress of promoting the digital yuan.
"Paper currency is used anonymously, but the digital yuan is different," Dongyan said. "The boundaries between information tracking and information security protection need more deliberation."
Albert Wang, a government employee in Suzhou, noted that while the digital yuan could help reduce corruption by limiting cash bribery, its limited usability makes it uncompetitive with widely used payment tools like Alipay and WeChat Pay.
Why It Matters: The Chinese government has been actively promoting the digital yuan, with Suzhou being one of the first cities to pay public sector workers in the new currency. Despite this, the slow adoption rate among workers raises questions about the currency’s future.
Moreover, in the same month, Standard Chartered Bank (China) became the first foreign bank to join China’s CBDC pilot testing, offering digital yuan exchange services to its customers. This move signaled the increasing internationalization of the digital yuan.
Furthermore, in March, SWIFT announced plans to launch a new platform connecting central bank digital currencies with the existing financial system. This development is expected to be a game-changer for the evolving CBDC ecosystem, given SWIFT’s crucial role in global banking.
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