Chinese laborers receiving payment in CBDC are converting it into fiat currency.

A recent report indicates that China's digital currency project is encountering challenges, as state employees paid in "e-CNY" or digital yuan often opt to convert it to physical cash rather than using it. Despite efforts to promote the adoption of the CBDC, many citizens remain hesitant due to concerns about surveillance and limited utility. While transactions with the digital yuan have surpassed $250 billion, balancing privacy and security remains a key issue for widespread adoption. Authorities assert that the digital yuan offers "controllable anonymity" but acknowledge the need for further deliberation on privacy concerns. Despite initiatives to boost adoption, including subsidies and consumption coupons, challenges persist in transitioning to a fully digital currency system.

While China has reportedly been a “functionally cashless” society for the better part of a decade, many Chinese citizens remain hesitant to use a purely digital currency like the digital yuan due to broader fears of surveillance and its limited use cases, SCMP’s report suggested. 

Despite these concerns, more than $250 billion worth of transactions have been conducted by way of the digital yuan as of July 20, 2023, according to Yi Gang, the former governor of the People’s Bank of China.

Ye Dongyan, a researcher at Beijing’s Cheung Kong Graduate School of Business, said there needs to be more effort made to balance privacy and security if the government wants to roll out the digital yuan throughout the rest of China.

Join Telegram Channel For Daily New update: https://t.me/cryptotelegraphs_updates