China's Digital Yuan Adoption Faces Resistance Among State Workers Amid Privacy Concerns
Summary:
Despite China's push to establish its new digital currency, e-CNY, resistance is emerging as some workers paid in digital yuan are rapidly converting it to physical cash due to concerns over privacy, lack of interest earned, and its limited use. The People's Bank of China has carried over $250 billion worth of transactions in e-CNY as of July 20, 2023, but experts believe more effort must be made to balance privacy and security to fully roll out China's Central Bank Digital Currency (CBDC) nationwide.
The initiative to pay state employees in China with digital currency, or e-CNY, seems to face initial resistance, as many have opted to convert their digital earnings to hard cash immediately. South China Morning Post reported on the 13th of May that workers receiving their salaries in the country's Central Bank Digital Currency (CBDC) prefer to convert it into cash as there's no benefit in maintaining it in their digital wallets. Sammy Lin, employed at a state-run bank in Suzhou city, explains, "There’s no interest if I leave it there. Plus, not many places accept e-yuan, online, or offline." While public servant Andrew Wang was not overly concerned about being paid a small portion of his salary in digital yuan, his wife, witch full salary in e-CNY, cashes out as soon as payment is received, citing limited utility of the digital currency. China, which has effectively adopted cashless transactions for over 10 years, finds its citizens skeptical about the widespread use of a wholly digital currency, fearing surveillance and restrictive applications, as pointed out in SCMP's report. Nevertheless, transaction volume involving the digital yuan, up to July 20, 2023, exceeded $250 billion, stated Yi Gang, ex-Governor of the People's Bank of China. According to Ye Dongyan, a researcher at Cheung Kong Graduate School of Business, Beijing, greater efforts are needed to balance privacy and security in the bid to introduce the digital yuan nationwide. "While cash transactions can remain anonymous, it's not the same with the digital yuan. Clearer boundaries must be defined between information tracking and privacy safeguarding," he expressed. Yi Gang has admitted that privacy issues represent the "biggest challenge" in the era of digital finance, but assures that the digital yuan has measures in place to "fully protect privacy". This concept called "controllable anonymity" allows anonymous small payments while monitoring larger ones. Since its launch in 2020, efforts have been made to encourage CBDC adoption across several provinces in China with over $26.5 million (180 million Chinese yuan) distributed as subsidies and shopping vouchers.
Published At
5/13/2024 8:47:14 AM
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