Two Chinese banks are expanding their pilot programs for the digital state fiat. State financial institutions have announced that they will allow digital yuan holders to purchase mutual funds and insurance products in the new currency.
Chinese banks are partnering with fund managers and insurers to find use cases for the digital yuan
China Construction Bank (CCB) and Bank of Communications (Bocom), two leading state-owned banks, are stepping up efforts to find new uses for the Central Bank Digital Currency (CBDC) issued by the People’s Bank of China. Lenders are now working with mutual fund managers and insurance companies as part of their digital yuan (e-CNY) pilot projects.
The cooperation is intended to facilitate the use of the digitized fiat currency for the purchase of investment funds and insurance products, reported the South China Morning Post (SCMP). Participants hope this could become another use case for the e-CNY “beyond daily low-value retail payments,” the publication notes.
According to a recent interim results release, the CCB has partnered with Shanghai Tiantian Fund Distribution to enable digital yuan users to make fund investments online. The platform is owned by the financial data service provider East Money, the report says. The Chinese e-commerce giant JD.com also supports the initiative. The bank’s executive vice president, Zhang Min, noted:
We have been involved in the research and development of the central bank digital currency since 2017, which we consider important for our payment system due to its ability to increase payment efficiency.
China Construction Bank has opened over 8.4 million digital wallets to individuals and businesses to date. As of June this year, CCB has processed a total of 28.5 million digital yuan transactions for 18.9 billion yuan ($ 2.9 billion).
“China’s central bank digital currency is legal tender, and from a commercial bank perspective, it is our obligation to promote the currency’s development and liquidity,” said Qian Bin, executive vice president of Bocom, on the interim results of the bank briefing last week. He announced that the Bank of Communications is exploring ways to use the e-CNY to fund management and insurance companies.
With the CBDC project, the world’s second largest economy is getting closer to building a cashless society. The Beijing government has conducted digital yuan tests in 11 pilot areas and cities in China, the Hong Kong-based newspaper points out. As of the end of June, 34.5 billion yuan had been spent over 70.75 million transactions. Chinese authorities distributed over $ 41 million to e-CNY in red envelope campaigns, according to a July report.
What other uses for the digital yuan do you expect from China? Do share your thoughts on the matter in the comments below.
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