China is steaming ahead with its CBDC agenda. The country continues to explore the possibilities of integrating the digital yuan with the broader financial and administrative system. As reported by the local outlets, including The 21st Century Business Herald and ThePaper.cn, the Ministry of Human Resources and Social Security has issued a notice outlining a plan to explore and promote the addition of digital renminbi payment capabilities to social security cards.
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The declared goal is to strengthen the groundwork for digital reform in human resources and social security and increase the interconnection between social security and banking services. Since 2018, Chinese banks have been allowed to issue social security cards with bank card-like features. Now, Beijing aims to digitize these cards by 2027 to improve accessibility to digital payments for people who don’t use smartphones – a key method of transacting with the digital renminbi.
Chinese authorities clearly work towards boosting CBDC adoption, especially in rural areas and among elderly people who are not keen to embrace the latest technological developments. By integrating payments, benefits, and identification functionality into a single card, the government anticipates increased e-CNY use from its citizens. Apart from physical cards, solutions explored by the Bank of China include bracelets, portable tags, and more. Those “smart” means of payment will enable citizens to pay their bills, public transport fees, and medical expenses, as well as receive social benefit and pension payouts.
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Digital yuan initiatives have been consistently rolled out across China for a few years. One example is a program enabling companies and individuals to settle energy bills with e-CNY in the Sagi City District of Suzhou State, another one – massive New Year giveaways. In February 2023, the Chinese government handed out around 180 million digital yuan, equivalent to $26,6 million, allowing citizens to spend the money on cultural event tickets, shopping, and food delivery.
According to opinions from some US politicians, the Chinese CBDC project threatens the US dollar’s status as the global reserve currency. In February, Blaine Luetkemeyer, a Republican from Missouri, introduced a bill to ban US money service businesses from working with the e-CNY. Recently, BNP Paribas SA faced heat from politicians in Washington regarding its alleged contribution to the Chinese digital yuan project.
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