• Chinese banks are looking for new ways to use the digital yuan in investment and insurance

  • Two Chinese banks are expanding their digital national fiat pilot programs. State-owned financial institutions have stated that digital yuan holders will be able to purchase investment funds and insurance products with the new currency.

    In search of digital yuan use cases, Chinese banks collaborate with fund managers and insurers.

    China Construction Bank (CCB) and Bank of Communications (Bocom), two major state-owned banks, are stepping up their efforts to find new uses for the People’s Bank of China’s central bank digital currency (CBDC). As part of their digital yuan (e-CNY) pilot projects, the lenders are now collaborating with investment fund managers and insurance companies.

    The collaboration aims to make it easier to buy investment funds and insurance using the digitalized fiat currency. According to the publication, the participants hope that this will be another use case for the e-CNY “beyond the low value, daily retail payments.”

    The CCB has partnered with Shanghai Tiantian Fund Distribution to enable digital yuan users to make fund investments online, according to a recent interim results announcement. East Money, a financial data services provider, owns the platform, according to the report. JD.com, a Chinese e-commerce behemoth, is also on board with the initiative. Zhang Min, the bank’s Executive Vice-President, stated:

    We’ve been involved in the research and development of the central bank digital currency since 2017, and we think it’s important for our payment system because of its ability to improve payment efficiency.

    Individuals and businesses have access to over 8.4 million digital wallets provided by China Construction Bank. As of June this year, CCB had processed a total of 28.5 million digital yuan transactions worth 18.9 billion yuan ($2.9 billion).

    At the bank’s interim results briefing last week, Bocom Executive Vice-President Qian Bin stated, “China’s central bank digital currency is a form of legal tender, and it is our obligation as a commercial bank to facilitate the currency’s development and liquidity.” Bank of Communications is looking into using the e-CNY to fund management and insurance companies, he said.

    The CBDC project is bringing the world’s second-largest economy closer to a cashless society. According to the Hong Kong-based newspaper, the Chinese government has been conducting digital yuan trials in 11 pilot areas and cities. 34.5 billion yuan had been spent in 70.75 million transactions as of the end of June. According to a July report, Chinese authorities distributed $41 million in e-CNY through red envelope campaigns.

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