Major Chinese banks consider expanding “digital yuan” to fund and insurance

TL;DR Breakdown:

• Chinese banks want to expand digital yuan utility so that holders can buy funds and insurance with it.
• The e-yuan trial has been successful as over $5 billion were transacted in June.

As part of the “digital yuan” pilot program, two state-owned Chinese banks said they are exploring ways to extend the applicability of the country’s digital currency to the funds and insurance market. The goal is to enable the residents to buy investment funds and insurance products using the e-yuan.

Bocom, CCB explores possible expansion of e-yuan utility

The Chinese central bank’s digital currency is only geared towards the daily retail payment outlined by the central bank. However, the officials at Bank of Communications (Bocom), China Construction Bank (CCG), disclosed they are working with fund managers and insurers to expand the utility of the soon-to-be-launched e-yuan.

China Construction Bank has collaborated with Shanghai Tiantian Fund Distribution and e-commerce giant JD.com to explore the possibility. 

“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,” said Qian Bin, the executive vice-president of Bank of Communications.

Digital yuan transactions exceed $5.3 billion

Over the past months, China has been extensively testing the digital yuan across several provinces and its collaboration with state-owned banks. PBOC revealed that a total value of 34.5 billion yuan ($5.3 billion) was transacted using the digital yuan in June alone.

The China Construction Bank recorded about 18.9 billion yuan (US$2.9 billion) worth of transactions in June, while the Bank of Communications recorded 2.5 billion yuan (over $386 million) in digital yuan transactions. 

Many companies based in China are also supporting the development of the digital yuan. Recently, Cryptopolitan reported that Honor had designed the first Snapdragon-powered smartphone that includes a wallet for the Chinese digital currency.