The use of the digital yuan, China’s central bank digital currency (CBDC), has seen a marked rise among Chinese companies, particularly in securing funds for eco-friendly initiatives. In a significant development, a Guangdong-based electronics firm, Zhongshan Jewelly Optoelectronics Technology, became the province’s first company to leverage a digital yuan-powered “green finance” loan, marking a broadening application of the CBDC. The firm secured funding exceeding $276,000 from the People’s Bank of China (PBoC) Guangzhou Branch via the company’s corporate digital yuan wallet.
As an LED device and module specialist, Zhongshan Jewelly sees the move as a novel approach to meeting growing financing and settlement needs caused by increased orders. The company’s experience is one that others may soon follow. Industry insiders reportedly highlight the ability of the digital yuan to give banks sophisticated control over fund flows in green finance, a distinct advantage in maintaining fund authenticity and upholding the credibility of green financial funds closed-loop circulations.
Not alone are the financing side of things seeing benefits. The PBoC coin’s traceability stands to prevent misappropriation of green funding loans. This, combined with the potential to mitigate the currently expensive process involved in tracking green financing funds, makes the digital yuan an appealing option to banks.
Furthermore, using the CBDC offers a cost-effective, efficient alternative to traditional methods for enterprises. The ability to use the digital yuan for seamless payments and settlements without incurring handling and service fees, along with real-time fund transfer, is a promising prospect. This not only reduces the company’s capital costs but also improves the efficiency of capital turnover.
Additional digital yuan-powered green loans are on the PBoC‘s roadmap, particularly in Guangdong Province, which became part of the digital yuan pilot last December. Expanded application scope in green financing is also on the table.
The embrace of the CBDC extends to paying taxes as well, with $51.3 million worth of taxes paid using the token within the first half of 2023 in Hunan Province. Moreover, last month saw Industrial Bank introduce China’s maiden CBDC settlement service for bulk commodity trading. As the digital yuan’s scope broadens, China continues its journey into a future intertwined with blockchain technology.
Source: Cryptonews
