Changshu, a city in China, is the first region in the country to recognize the e-CNY CBDC as a salary payment mode. From May, government employees in Changshu will receive their monthly salaries in the form of the e-CNY CBDC, according to local reports. The financial authorities governing the city have finalized this decision. The e-CNY CBDC will be used as a salary mode for people working in Changshu’s public service, public institutions, and state-owned units at all levels.
China’s CBDC Initiative
China is one of the largest countries in the world experimenting extensively with its CBDC initiative. Despite banning all crypto-related activities in 2021, China continued its research around the use cases of blockchain technology that provides the underlying support for crypto and Web3. Between 2020 and 2022, China launched its e-CNY app to facilitate payments through its CBDC. Transactions via the digital currency are recorded permanently on the blockchain, making financial history transparent and credible on the records. In addition, the use of CBDCs for daily payments would also eliminate the need for central banks to invest heavily in managing and maintaining cash notes.
Other Countries’ CBDC Efforts
India has also entered into an advanced phase of testing its e-Rupee digital currency, and select banks and retailers are helping testers facilitate payments. In the coming days, India will expand CBDC uses in more cities. Pakistan plans to release its digital currency by 2025, and the country’s central bank, the State Bank of Pakistan, has decided to select and license electronic money institutions to issue e-money to facilitate digital payments. Hong Kong is currently working on the roadmap to introduce the e-HKD CBDC to its estimated population of over 7.5 million in the coming months.
China’s CBDC Trials
Around April 2022, China made its CBDC trials available in 23 cities, including Shanghai, Beijing, and Shenzhen. Residents of these cities were allowed, in fact encouraged to pay for goods and services with the e-CNY. President Xi Jinping’s government is trying out different ways to advertise the uses of the e-CNY CBDC. In December last year, the Chinese government allowed existing CBDC users to gift CBDCs instead of cash gifts to each other around the New Year’s celebration.
China’s Changshu city has taken a significant step towards using the e-CNY CBDC as a salary payment mode. The country is among the largest in the world to experiment with its CBDC initiative, and the use of CBDCs for daily payments would eliminate the need for central banks to invest heavily in managing and maintaining cash notes. Other countries, including India, Pakistan, and Hong Kong, are also accelerating their CBDC efforts.
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