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Chinese Banks Exploring Use of Digital Yuan for Buying Investment Products

cryptoknowmics.com 31 August 2021 06:30, UTC

Chinese government banks want to enable digital yuan holders to buy investment funds and insurance products online, as reported by South China Morning Post. The country’s Bank of Communications (BOCOM) and China Construction Bank (CCB) are collaborating with fund managers to broaden e-yuan’s applications beyond retail payments.

Chinese Banks Looking to Expand Digital Yuan Use Through Investment products

China is going full steam ahead with the adoption of its upcoming digital currency. As part of the efforts, the country’s two leading government banks are in talks with fund distributors and insurance companies to integrate digital yuan into their payment options.

CCB is said to be teaming with one of the country’s top fund distributors, Shanghai Tiantian Fund Distribution, to allow e-yuan holders to make online investments in funds.

“We have since 2017 been participating in the research and development of the central bank digital currency, which we view as significant for our payment system due to its ability to enhance payment efficiency,” CCB’s vice president Zhang Min said at the bank’s interim results briefing.

The SCMP report states that CCB has opened 7.23 million digital wallets for individuals, and 1.19 million wallets for companies until now. Additionally, the bank has recorded 28.5 million transactions in e-yuan amounting to $2.9 billion as of June.

Meanwhile, BOCOM is researching the idea of including digital yuan in transactions with fund managers and insurance companies. The bank has registered more than 6.3 million CBDC transactions totaling $386 million since June.

“China’s central bank digital currency is a form of legal tender, and from the perspective of a commercial bank, it is our obligation to facilitate the development and liquidity of the currency,” Bocom’s vice president Qian Bin emphasized during last week’s interim results revelation.

China’s Digital Currency Aimed at Cashless Society

At the moment, China’s virtual currency tests are limited to 11 pilot areas and cities. Some of these tests have also been extended to ATMs and transit systems. However, the number of these testing sites is expected to increase till February’s Winter Olympics, when China will get to showcase the capabilities of digital yuan to the international community.

The central bank’s digital currency is one of China’s most ambitious projects to date. It was proposed seven years ago by the People’s Bank of China (PBOC) to curtail the popularity of private payment services such as WeChat and AliPay. Although, e-yuan has since evolved into a crucial tool that can transform cross-border trades and payments.

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