Cryptocurrencies

It is said that China’s digital currency project is still facing problems at an early stage

China’s digital currency project is said to still be facing problems at an early stage, with a report indicating that some Chinese government employees who are paid in e-CNY, or digital yuan, rarely use it and convert it to cash.

According to a May 13 report from the South China Morning Post, some Chinese cities have begun paying state employees’ salaries in the country’s central bank digital currency, but most of those early adopters converted it to cash immediately.

“I prefer not to keep money in the e-CNY app, because there will be no interest if you leave it there,” said Sammy Lin, an account manager at a Chinese state bank in Suzhou.

“There are also not a lot of places, online or offline, where I can use the e-yuan.”

Civil servant Andrew Wang said he was not too worried about the idea of ​​digital cash because only a small portion of his salary was paid in digital yuan.

However, his wife – who receives her entire salary in digital yuan – withdraws the entire amount in regular cash the moment she pays due to the lack of benefit from digital cash.

e-CNY application used in Suzhou. Source: Kyodo

“She cannot deposit funds or purchase financial products using the e-CNY wallet,” Wang said.

While China has been a “functionally cashless” society for the better part of a decade, many Chinese citizens remain reluctant to use a purely digital currency like the digital yuan due to broader concerns of surveillance and limited use cases, the SCMP report noted.

Despite these concerns, more than $250 billion worth of transactions had been conducted via the digital yuan as of July 20, 2023, according to Yi Gang, former governor of the People’s Bank of China.

Yi Dongyan, a researcher at Cheung Kung Graduate School of Business in Beijing, said more effort must be made when balancing privacy and security if the government wants to roll out the digital yuan across China.

“Fiat currency is used anonymously, but the digital yuan is different. He said that the boundaries between tracking information and protecting information security need further deliberation.

Related: The Hong Kong issuer is seeking a spot Bitcoin ETF for mainland China

Zhang said privacy issues related to the new central bank digital currency were the “biggest challenge” in the era of digital finance.

Despite privacy concerns shared by program participants, Zhang said at a March forum in Beijing that the digital yuan was able to “fully protect privacy” through so-called “controllable anonymity,” meaning there is no tracking of micropayments. But some are for larger payments. That.

Since the coin’s launch in 2020, several jurisdictions in China have been working to boost CBDC adoption, with multiple cities donating more than $26.5 million (RMB 180 million) via subsidies and consumption coupons.

Magazine: The Bitcoin Man, X Hall of Flame: China Will Intensify Bitcoin’s Rise, $1 Million by 2028

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