China’s digital currency project is facing some initial challenges. A recent report says that some Chinese workers who are paid in digital yuan (e-CNY) don’t use it much and instead quickly exchange it for physical cash. This is happening even though some cities have started paying state employees with digital currency.
For example, Sammy Lin, who works at a Chinese state bank, doesn’t like to keep his money in the digital yuan app because he doesn’t earn any interest. He also finds limited places where he can spend the digital yuan. He added, “There are also not so many places, online or offline, where I can use the e-yuan.”
Andrew Wang, a civil servant, isn’t too worried about digital cash because only a small part of his salary is paid that way. But his wife, who receives her entire salary in digital yuan, immediately withdraws it as cash because she can’t do much else with it.
Wang added, “She can’t deposit the money or buy financial products with the e-CNY wallet.”
Even though China has been mostly cashless for many years, people are still hesitant to use digital yuan because they are concerned about surveillance and there aren’t many places where they can use it.
Despite these concerns, over $250 billion worth of transactions have been done using digital yuan as of July 20, 2023, according to Yi Gang, the former head of China’s central bank.
Ye Dongyan, a researcher, says that the government needs to do more to balance privacy and security if they want more people to use digital yuan. He says that while paper money is anonymous, digital yuan isn’t, and there needs to be more thought about how to protect people’s information.
Also Read: EigenLayer Project Bypasses US and China in Token Launch
