Chinese state-owned banks are experimenting with using the digital yuan to buy investment funds and insurance products

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Two large government-owned Chinese banks are expanding the trial projects for the national digital currency. The China Construction Bank (CCB) and the Bank of Communications (BOCOM) have started researching new uses for the digital renminbi, such as allowing citizens to buy investment funds and insurance online.

The two state-owned banks collaborate with money management and insurance firms to expand China’s digital currency payments beyond retail.

China Construction Bank has collaborated with Shanghai Tiantian Fund Distribution, an investment funds platform, to allow individuals to participate in online funds using the e-yuan. JD.com, the Chinese e-commerce behemoth valued at approximately $120 billion and listed on the Nasdaq US stock exchange, is also a collaboration member.

Zhang Min, China Construction Bank’s executive vice-president, spoke about the development, saying that the bank has been involved in the research and development of the central bank’s digital currency since 2017, which they see as important for their payment system because of its ability to improve payment efficiency.

According to China Construction Bank, 8.42 million individual users and 1.19 million businesses now have digital yuan wallets.

As of June, China Construction Bank had recorded a total of 28.5 million digital yuan transactions worth 18.9 billion yuan (US$2.9 billion).

The Bank of Communication (BOCOM) investigates how the e-yuan funds’ management and insurance companies.

BOCOM’s executive vice president, Qian Bin, remarked on the present situation, stating that the bank is actively investigating different use cases for the digital yuan in the fund management and insurance environment.

“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,” Qian said.

On the other hand, Qian made no mention of the bank’s investment managers or insurance businesses. The Bank of Communications has registered 6.3 million e-yuan transactions worth 2.5 billion yuan as of June.

The efforts of the two government-owned banks go beyond China’s central bank’s original CBDC model, which was supposed to power just the low-value, everyday retail payment environment.

Renminbi Digital is now available for exchange.

While the general public will use China’s retail central bank digital currency (CBDC), the wholesale CBDC will be given to commercial banks and other organizations for large-scale transactions.

Last month, 35 Chinese commercial banks allowed customers to utilize the country’s new CBDC, showing that the system is improving.

CITIC, China Everbright, China Merchants Bank, Shanghai Pudong Development Bank, Minsheng, Ping An, Guangfa, and Zheshang are among the financial institutions that accept deposits and withdrawals in the digital yuan, in addition to the six state-run banks.

Thousands of residents were chosen through a lottery method to use a specialized app to spend their national digital money, also known as digital currency electronic payment (DCEP), at both online and offline businesses.

The Industrial and Commercial Bank of China (ICBC) was the country’s first bank to embrace the digital yuan. According to a function provided by the state-owned bank, clients may now convert their digital renminbi to cash at over 3,000 ATMs around Beijing.

China continues testing its national digital currency pilot projects and working with international financial authorities to establish a legal framework for CBDCs.

Because the CBDC has not been formally launched to the public, China’s central bank has not ascribed a monetary value. Though China’s government is still working to make the digital yuan a widespread currency, it has been quick to prohibit the usage of Bitcoin and other private cryptocurrencies within its borders.

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