French bank BNP Paribas has announced a collaboration with the Bank of China (BOC) to trigger increased adoption of the digital yuan among its corporate clients.
The partnership between both financial institutions will allow BNP Paribas’ corporate clients to link their digital wallets to their bank accounts, according to a South China Morning Post report. An official statement from BNP revealed that a digital management system for corporate clients will encourage “efficient and real-time” adoption of China’s central bank digital currency (CBDC).
“The collaboration has once again demonstrates our commitment to the China market, and we will continue to enhance our customer service capabilities through digital innovation and contribute to China’s economic development,” CG Lai, BNP Paribas China CEO, said.
The latest move sees BNP Paribas join HSBC subsidiary Hang Seng and 10 other banking institutions in offering digital yuan products for institutional clients. The bulk of financial institutions appears to be foreign-based banks fueled by the rapid rise of the digital yuan.
A detailed report by Oliver Wyman suggested that the banks are driven by the competitive advantage to be gained if the digital yuan is utilized for cross-border transactions. The People’s Bank of China (PBoC) has already opened talks with Russia for international payments with CBDCs after successfully completing a Bank for International Settlement pilot with Hong Kong, the United Arab Emirates, and Singapore.
The amount of digital yuan in circulation stands above $14 billion, while over 200 million residents have interacted with the CBDC based on data gleaned from mobile app downloads. The Chinese Communist Party (CCP) has expressed a keen desire for the digital yuan to compete favorably against other payment alternatives like Alipay and WeChat Pay.
Valiant attempts at boosting adoption
As the PBoC faces the daunting task of roping in over 1 billion consumers, it launched several initiatives, including giving away $26 million worth of digital yuan subsidies to citizens during the New Year celebrations. Other schemes include the proposed payment of salaries in digital yuan, integration in securities trade, and enabling new wallet functionalities.
Attempts at boosting overseas adoptions are falling apart, with lawmakers in the U.S. presenting bills for the blanket ban of the digital yuan in the country. Despite the offer of consumption coupons, the hard launch of the digital yuan in Hong Kong only recorded 625 users in the first four days, spelling a rough patch ahead.
To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.
Watch: Lise Li: BSV Blockchain in China
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