Chinese banks are planning to allow customers to pay for more wealth management products using the digital yuan, marking a significant step in the ongoing rollout of the nation’s central bank digital currency (CBDC). According to the Financial Report Network, the state-owned China Construction Bank (CCB) is collaborating with China International Capital Corporation and securities firms Orient Securities and Guotai Junan Securities to enable the use of personal digital yuan wallets in transactions.
This development means that customers will be able to connect their CBDC holdings with securities accounts, allowing for the digital yuan to be chosen as a payment option in securities apps when purchasing securities. Additionally, traders will be able to receive digital yuan payments when they sell stocks. Other features include access to paywalled research data, securities news services, and reports for digital yuan-paying customers.
The deal also enables these firms to set up tri-party (tri-partite) custody agreements using the digital yuan. Tri-party custody agreements involve funds that appoint custodians to hold securities and fiat on behalf of their investors. This integration further strengthens the practical use cases for the digital yuan in the financial industry.
The CCB stated that it plans to “continue to leverage its rich experience in the fields of digital yuan research and development,” exploring and promoting the CBDC’s application and innovation in new scenarios. This move comes after the China Securities Regulatory Commission, the country’s markets regulator, announced in May that it would permit domestic securities operators to provide digital yuan securities offerings.
Further progress was made when the commission granted approval to securities provider China Galaxy to launch a pilot for a digital yuan-powered over-the-counter wealth management product. China Galaxy is partnering with the Industrial and Commercial Bank of China, another of China’s state-owned banks.
As digital yuan adoption continues to grow, it is worth considering the potential drawbacks that could arise. The CBDC might lead to increased surveillance and control over the economy, affecting individual privacy and freedom. On the other hand, its rapid expansion could transform the financial landscape, providing greater efficiency, lower costs, and increased financial inclusion. However, it remains to be seen how this development will ultimately impact China’s financial ecosystem and the global economy in the long run.
Source: Cryptonews
