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China Tests Digital Yuan In Wage Payments

China Tests Digital Yuan In Wage Payments

June 15, 2021 at 01:04AM
by PYMNTS

Digital yuan is now in play in China’s Xiong’an New Area, CoinDesk reported.

The district, located around 60 miles south of Beijing, has served as a testing ground for new economic ideas, according to the report. The digital yuan, a central bank digital currency (CBDC), will be used there to pay some workers.

The Xiong’an government said the digital yuan pilot is the country’s first “on-chain” payment used for builders’ wages, the report stated. The region will be using the Blockchain Fund Payment platform to pay wages.

According to Xiong’an, per CoinDesk, the Shijiazhuang branch of the People’s Bank of China (PBOC) and the reform and development bureau of Xiong’an’s management committee both helped in guiding and managing the project.

China is fairly far along in its testing of the digital yuan, the report stated. It has done so in several different regions throughout the past year, as well as set up a legal framework for the CBDC with various global finance regulators. The PBOC’s tests of digital currency have involved commercial banks and payment providers.

China doesn’t want the currency to be seen as a “weapon” against the U.S. dollar, which is still the primary medium for international transactions in China, PYMNTS reported. Central bank Vice Governor Li Bo said in April that testing so far has shown that the digital currency has worked well within the system for Chinese finance.

He said there’s currently no timetable for expansion of the regulatory framework for the digital yuan, although expansion will happen eventually. That will include visitors to next year’s winter Olympics being able to use the currency, as well as the currency being set up for cross-border payment use.

Officials have also maintained that the digital yuan won’t replace digital pay services from several top contenders like Ant Group’s Alipay and Tencent HoldingsWeChat Pay.