The heart of the Chinese financial and industrial sector is enthusiastically pumping towards the widespread utilization of smart contracts powered by its digital yuan, commonly referred to as the e-CNY. In a remarkable stride forward, the state-run Postal Savings Bank of China has pioneered the country’s first “prepayment product” that employs digital yuan smart contracts.
Unlike the preponderance of Central Bank Digital Currency (CBDC) projects, the e-CNY operates independently of any blockchain base. Instead, it relies on centralized IT architectures that dwell under the supervisory umbrella of PBoC. Nonetheless, reveling in the current tide of progress in Bitcoin, crypto, and blockchain tech, the PBoC aspires to incorporate some of the IT advancements into the e-CNY project, particularly smart contract tech.
The collaborative venture gave birth to Wuka, a new platform crafted by the Postal Savings Bank and the China Fangyuan that primarily supports heavy machinery, transport, and construction businesses. The partners foresee the potential offered by the new platform to merchants, extending numerous business capabilities including project supervision, card issuance, marketing, and management.
It punctuates the narrative that smart contracts have a vital role in various business operations such as financing and local government spending. Incorporating digital yuan smart contracts into the merchant business field could stimulate the use of digital RMB in the prepayment realm. It’s particularly prevalent in sectors where vendors furnish custom or tailor-made products/services—a field ripe for the CBDC addition.
On the downside, a centralized approach may lack trust, often leading to breaches. The ICBC proposed blueprint suggests that smart contracts could become a shield against trust issues, claiming that digital yuan smart contracts would effectively uphold and automatically honor contracts.
Furthermore, the ICBC has extolled the wisdom of using CBDC in smart contracts. They assert that the proprietors’ commercial credit, bound by the commercial entity, is elevated up to the national credit standard upheld by the PBoC. Such elevation enables cross-sector interface and mutual recognition.
By advocating the use of the coin for buying tickets and paying for public transport to event venues, the PBoC aims to draw global focus to their digital yuan during the 19th Asian Games. They’ve established “experience booths,” allowing athletes and coaches to learn more about the e-CNY and its applications. While this systemic change offers a promising future, skepticism prevails in the form of potential disruptions and security risks.
Source: Cryptonews
