The Bank of China, a Chinese majority state-owned commercial bank, has pioneered a new use case for China’s central bank digital currency (CBDC) platform. The bank, headquartered in Beijing, announced the testing of a product that uses the e-CNY smart contracts feature to facilitate fee payments to after-school training programs.
Local news outlet Sohu.com reports that the product is the first project launched under the newly released smart contract framework of the Digital Currency Research Institute. It allows parents to enroll their wards in extracurricular lessons using prepaid cards funded by e-CNY.
The smart contracts capability of the CBDC allows for the product to introduce more efficiency to the educational system by taking the role of regulatory authorities. With the prepaid cards, parents can pay a deposit to private educational entities for a series of lessons. The smart contract then executes payment on a per lesson basis, allowing for easy refunds of any missed lessons.
“The program seeks to explore the benefits brought forth by e-CNY smart contracts. One potential use case is replacing the role of regulatory authorities to monitor payment transactions between parents and private education entities. Another is improving transactions’ liquidity via zero transaction fees embedded in the e-CNY design,” the bank said in a statement.
The product is coming first to the city of Chengdu, located in China’s Sichuan province, and is being developed under the guidance of the Digital Research Institute, the Chengdu Longquanyi District Education Bureau, and Chengdu Tianfutong Financial Services Co., Ltd.
e-CNY use cases and adoption increasing
The project is not the first time the Bank of China, which is the fourth largest bank in the world, has worked with the digital yuan. The bank is one of the leading intermediaries serving merchants that accept the CBDC.
Other public and private institutions have also been pioneering new use cases for the CBDC. This month, the Rural Commerce Bank of Zhangjiagang issued an e-CNY loan collateralized with intellectual property (IP), another first of its kind. The loan of about $74,000 made out to an environmental protection equipment manufacturer is the first case of IP financing using e-CNY.
Meanwhile, the government of China has not relented in pushing for greater adoption of the CDBC. The People’s Bank of China has stated its intention to onboard more provinces and cities for the pilot testing of digital yuan payments. So far, over 400,000 vendors across the country accept the CBDC as a payment method.
Watch: The BSV Global Blockchain Convention presentation, CBDCs and BSV
New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.