{"id":64755,"date":"2023-09-24T04:47:18","date_gmt":"2023-09-24T08:47:18","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/crypto\/china-banks-firms-in-e-cny-smart-contract-drive\/"},"modified":"2023-09-24T04:47:21","modified_gmt":"2023-09-24T08:47:21","slug":"china-banks-firms-in-e-cny-smart-contract-drive","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=64755","title":{"rendered":"China Banks, Firms in e-CNY Smart Contract Drive"},"content":{"rendered":"
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Chinese banks and businesses want to step up their use of digital yuan-powered smart contracts, as the financial and industrial sectors eye CBDC progress.<\/p>\n

Per the Securities Times (via Stockstar), the state-run Postal Savings Bank of China has \u201cofficially\u201d co-launched the nation\u2019s first \u201cprepayment product\u201d to make use of digital yuan smart contracts.<\/p>\n

Unlike many other CBDC projects, the e-CNY is not blockchain-based.<\/p>\n

Rather than making use of decentralized ledger technology, it utilizes centralized IT solutions.<\/p>\n

These solutions are all controlled by the central People\u2019s Bank of China (PBoC).<\/p>\n

But the PBoC has been keen to cherry-pick IT advances from the world of Bitcoin, crypto, and blockchain, with a view to integrating these in the e-CNY project.<\/p>\n

One of these is smart contract technology.<\/p>\n

Chinese economic thinkers believe this will help in business areas like financing and local government spending.<\/p>\n

The Postal Savings Bank\u2019s platform has been created in conjunction with China Fangyuan, a heavy machinery, transport, and construction-focused business group.<\/p>\n

The parties have called their new platform Wuka, and say it can provide merchants with a range of \u201cbusiness capabilities,\u201d including card issuance, project supervision, marketing, and management.<\/p>\n

The media outlet noted that the new platform \u201cintroduces digital yuan smart contracts into the merchant business field.\u201d<\/p>\n

It added that the move would also \u201cpromote the use of the digital RMB\u201d in the \u201cprepayment space.\u201d<\/p>\n

Prepayment deals are common in industries where vendors provide custom- or tailor-made products or services.<\/p>\n

Banks worldwide are growing increasingly keen on using smart contract technology.<\/p>\n

But in China, state-run entities have attempted to integrate this with the digital yuan project.<\/p>\n

In a column published in the financial newspaper Caixin, the Digital Currency Department of the Industrial and Commercial Bank of China ( ICBC), wrote:<\/p>\n

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\u201cIn the future, all contracts based on […] payments in the digital economy will be [compatible] with digital [yuan-powered] financial services.\u201d<\/p>\n<\/blockquote>\n

The ICBC wrote that digital yuan smart contracts would be particularly valuable \u201cin situations where trust is weak and where breaches of contract occur frequently.\u201d<\/p>\n

The e-CNY & Smart Contracts: New Ground for the Chinese Digital Yuan?<\/h2>\n

The bank noted that e-CNY smart contracts will \u201ceffectively ensure the enforcement and automatic honoring of contracts.\u201d<\/p>\n

Using the CBDC in smart contracts makes sense, the ICBC claimed, because \u201ccredit rating is upgraded from the commercial credit of a commercial entity to the national creditworthiness of the PBoC.\u201d<\/p>\n

The use of the coin will thus \u201cenable mutual recognition and interoperability across business sectors,\u201d the ICBC concluded.<\/p>\n

On the retail front, the PBoC is hoping to attract international attention for its coin at the 19th Asian Games.<\/p>\n

The games got underway on September 21 in Hangzhou.<\/p>\n

Spectators, athletes, and coaches will be shown how to use the coin at \u201cexperience booths\u201d run by the likes of the ICBC at and around games venues.<\/p>\n

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Domestic spectators, meanwhile, have been encouraged to use the coin to buy tickets and pay for public transport rides to event venues.<\/p>\n<\/p><\/div>\n