China to speed up, expand digital yuan smart contracts, PBOC official says

Please fol­low and like us:
Pin Share

The People’s Bank of Chi­na (PBOC), the nation’s cen­tral bank, plans to deploy more smart con­tracts for the dig­i­tal yuan as an increas­ing num­ber of use cas­es have emerged amid test­ing of the new dig­i­tal currency.

Mu Changchun, direc­tor-gen­er­al of the PBOC’s dig­i­tal cur­ren­cy insti­tute, said in a speech on Fri­day that smart con­tracts involv­ing the dig­i­tal yuan, or e‑CNY, are being used in areas such as gov­ern­ment sub­si­dies, retail mar­ket­ing and pre-paid fund management.

The move is in line with the institute’s whitepa­per last year that said the e‑CNY would obtain pro­gram­ma­bil­i­ty from “deploy­ing smart con­tracts that don’t impair its mon­e­tary functions.”

Smart con­tracts, wide­ly used in blockchain and decen­tral­ized set­tings, are trace­able self-per­form­ing con­tracts that enable con­di­tion­al pay­ments, guar­an­teed pay­ments and oth­er com­plex use cas­es. E‑CNY smart con­tracts could “facil­i­tate busi­ness mod­el inno­va­tion,” the PBOC said last year.

Mu said that the “guar­an­teed enforce­ment” nature of smart con­tracts means that there needs to be sound man­age­ment of smart con­tract tem­plates and sys­tems in place oth­er­wise it could bring risks to eco­nom­ic and finan­cial stability.

“Smart con­tracts, in this sense, have to go through com­pli­ance reviews and tests before they are made into tem­plates and mod­els,” Mu said, adding that the PBOC is work­ing to estab­lish a plat­form to review and reg­is­ter smart con­tract models.

The deploy­ment of e‑CNY smart con­tracts could effec­tive­ly reduce costs for eco­nom­ic activ­i­ties and could be put to use in var­i­ous sce­nar­ios, accord­ing to Mu.

Last month, Bank of Chi­na, one of the country’s largest state-owned com­mer­cial banks, start­ed to sup­port e‑CNY via smart con­tracts for after-school edu­ca­tion pro­grams in Cheng­du, the cap­i­tal city of south­west­ern China’s Sichuan province, local media report­ed in August.

Under the ini­tia­tive, par­ents could pre-pay for class­es with the e‑CNY and if the stu­dents miss some class­es, the tuition would be auto­mat­i­cal­ly refund­ed via the program’s smart con­tract set­tings. That could avoid refund prob­lems if an edu­ca­tion­al insti­tu­tion ever gets its bank accounts frozen due to legal issues.

The PBOC start­ed pilot tri­als of the e‑CNY in Shen­zhen in Octo­ber 2020 and it has since expand­ed the tri­als to at least 23 cities and regions.

Chi­nese tech giants are also embrac­ing dig­i­tal yuan pay­ments. In June, online retail plat­form JD.com record­ed 400 mil­lion yuan (US$60 mil­lion) in dig­i­tal yuan sales at the “618” shop­ping fes­ti­val, account­ing for about 0.1% of the event’s total sales. 

The use of the dig­i­tal yuan has also been expand­ed to include a vari­ety of pub­lic trans­port and munic­i­pal ser­vices, includ­ing metro, bus­es, trains, high­way toll gates, tax­a­tion and social insur­ance

Source link

Please fol­low and like us:
Pin Share

Leave a Reply

Your email address will not be published. Required fields are marked *