The Chinese government is about to vigorously promote "digital renminbi". Changshu City is the first local government in China to announce the use of digital renminbi for salary payment. The Changshu Municipal Government has announced that starting in May this year, the salaries of civil servants and local state-owned enterprises will be converted to digital renminbi. Instead of issuing traditional RMB, this policy has caused considerable controversy. Some people believe that digital renminbi will infringe on people's personal privacy because unlike the past, where payments were made through WeChat, the Chinese government will have a way to directly track all financial flows.

Although the city is promoting digital renminbi payments, this digital currency cannot be connected to China's existing banking system, which means that people who receive digital renminbi salaries will not be able to use services such as withdrawals, debit cards, or binding WeChat payment. Cross-border exchange is not possible, and there may be no interest on deposits. When people receive digital renminbi, they may only be able to go to specific areas for consumption, and cannot use other financial services, nor can they use it in other counties or cities that do not support digital renminbi.

On the other hand, the issuance of digital renminbi may be independent of the system of the Central Bank of China. You can issue as much as you want. Coupled with the restrictions on use, it is equivalent to issuing consumer vouchers without asset reserves to civil servants as salaries. It also reveals that China Due to the financial difficulties of local governments, this measure is actually quite insecure for people receiving digital renminbi.

Statement: The article only represents the author's personal views and opinions, and does not represent the objective views and positions of the blockchain. All contents and opinions are for reference only and do not constitute investment advice. Investors should make their own decisions and transactions, and the author and Blockchain Client will not be held responsible for any direct or indirect losses caused by investors' transactions.

This article MICA Daily ｜China’s Changshu City civil servants’ salaries will be changed to “digital renminbi” starting next month first appeared on Blockchain.