The use of e-CNY, or the digital yuan, is now being expanded beyond the purchase of consumer goods. In detail, Beijing has cracked down on other cryptocurrencies such as bitcoin and is instead seeking to provide its own alternative.
The Chinese digital yuan can now be used in bank loan and wealth management products. This move by the Chinese central bank expands the use of the digital currency beyond purchasing consumer goods.
e-CNY is currently used in more than 20 cities across China and although e-CNY is still in its beta stages, the trial has been gradually expanded since its inception in 2020.
The Chinese government has introduced e-CNY as Bejing has cracked down on bitcoin and other cryptocurrencies, seeking instead to provide a government-sanctioned and censored digital alternative.
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Last week, a man purchased an auto insurance policy using e-CNY, according to reports from the Chinese government-funded Securities Times.
In addition, China Construction Bank Corporation (CCB) is now allowing customers to use e-CNY wealth management products on its mobile app, according to Reuters news agency.
“In the future, the digital yuan can be applied in more scenarios such as medical treatment, education and finance,” Zhang Ming, chief economist at the Chinese Academy of Social Sciences wrote in an online post on China .
China’s central bank claims e-CNY had a transaction volume of 87.6 billion yuan ($13 billion; 12.4 billion euros) at the end of 2021.
Digital wealth management tools like e-CNY are not new to China. Alipay, the digital payment service provider owned by Ant Group, has offered similar services since 2013 when it launched its own digital money market fund.
Despite the success of the fintech giants, China has pushed to expand the use of the digital yuan. Apps like Alipay require a mobile phone and the Internet China’s population is highly mobile with more than 990 million people using mobile services in 2021, according to GMSA, but research that Conducted by the World Bank indicates that 20% of the Chinese population does not have access to the Internet.
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Earlier this year, China began issuing cards complete with a small LCD screen that tells users what money is in their e-CNY account. These cards can be used offline.
Richard Touraine, an expert on Chinese digital currency, told DW that mechanisms like this fill in the gaps where fintech companies cannot by providing “a secure, government-backed, free or near-free and instant transfer of funds.”
