- China CBDC debuts in insurance industry.
- University professor says digital yuan is important in insurance industry to extend its use in beyond e-commerce and retail payment.
- China continues to lead in CBDC test.
The Peoples’ Bank of China has continued making landmark achievements with the Digital Yuan after the pilot test began. The CBDC has enjoyed successive tests in the e-commerce industry down to being used to pay salaries and also for lotteries.
The Digital Yuan has also been deployed for test in several provinces in China, and most recently, the Digital Yuan made its debut in the insurance industry.
PBOC in the City of Shenzhen is piloting the CBDC with a local subsidiary of China’s leading insurer, Ping An. The insurance policy is for medical workers in Shenzhen’s Nanshan District. It allows them various levels of compensation for diagnosis of or death due to COVID-19.
Medical workers in Shenzhen have also been encouraged to use the digital yuan wallet to make insurance premium payments as they are offered certain incentivized allowance.
Significance of digital yuan test on Insurance industry
Wang Peng, an assistant professor at the Gaoling School of Artificial Intelligence, Renmin University of China, explained that the test is significant in the insurance industry to extend the use of the CBDC beyond e-commerce and retail payments.
He said the use in the insurance industry also demonstrates its feasibility in a much wider range of more complex application scenarios.
The next stage for the CBDC in the insurance industry is for it to be used for insurance claims payments and other scenarios in the insurance sector.
China leading horse in CBDC race
China has begun testing the digital yuan since October 2020. It started in Shenzhen when the local government and China’s central bank jointly gave away 50,000 digital red packets with each containing 200 yuan.
This was the first time the CBDC was tested in public. After that, there has been no looking back as the PBOC has been promoting the use of the digital currency in several other cities.