Chinese digital currency-related stocks recorded gains on Monday despite a muted general market sentiment as China pushes its digital yuan.
The news can be attributed to China’s latest measures aimed at promoting e-yuan. The use of its central bank’s digital currency, the digital yuan, has become official in other regions.
China’s Digital Yuan Push Continues
Shares of Global Infotech, Chutian Dragon, Newland Digital Technology, and Northking Information Technology were all trading up at the time of publishing.
Despite the positive market sentiments, the benchmark index declined by 0.3%. Meanwhile, some larger macro concerns are at play. It includes the pace of China’s economic recovery and the possibility of retaliation by G-7 nations. This comes as India’s attraction as a business destination grows in Asia.
However, the surge in digital currency-related stocks is largely due to Changshu announcing digital payments. Starting in May, the city will reportedly pay wages to state sector employees in digital yuan.
This development is significant, considering that Changshu has a population of around 1.5 million people. This move is anticipated to increase the use of digital money. In addition, South China Morning Post notes that it will affect those who work for public institutions, including teachers, medical professionals, and other employees of state-owned enterprises.
Senior financial expert Wang Pengbo told the newspaper that using e-CNY to pay salaries will help the virtual currency gain popularity. According to the SCMP report, certain state sector employees in other regions have been receiving e-CNY as salary since last year. According to the report, some public school personnel in the region have been receiving transport subsidies since October.
Dan Wang, the chief economist at Hang Seng Bank China, told the media, “The development marks the latest trial China is doing to promote its e-CNY.”
How This Could Impact the USD
China has been attempting to market its digital currency for a few years now. Local governments have promoted it, and some have even started small-scale trials to use it to pay for government subsidies. As per reports, approximately 4,900 state enterprise employees have received overtime payments digitally, totaling 2.5 million yuan ($363,000) since June of last year.
Additionally, some experts think that the decline of the dollar as the world’s reserve currency could accelerate from the rise of the digital yuan. China has been the most rapid in adopting its digital currency as other nations push their centrally-backed alternatives.
The Kobeissi Letter asserts that China is employing the e-yuan for trade with Russia on a global scale, particularly in light of the recent unprecedented turbulence in the financial industry that has weakened the USD. The turmoil led by the closure of Silicon Valley Bank in the U.S.
With the use of e-yuan, e-payment systems would no longer have access to information on transactions. Beijing apparently refers to the push for the digital yuan to protect people’s privacy.
The widely used Chinese software WeChat Pay recently integrated the digital yuan app for quicker payments.
Since the Winter Olympics controversy, China hasn’t been able to do anything to push its international usage. Meanwhile, China keeps up its worldwide firewalls for domestic companies. The restrictions prohibit businesses and individuals from utilizing the yuan outside of China.
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