Bank of China apply smart contract technology to digital yuan

August 17, 2022 0 Comments

Bank of China have rolled a program to make use of smart contracts in its digital yuan for primary school education.

Sichuan branch of Bank of China has partnered with Chengdu education and financial authorities to launch a digital yuan project, allowing parents living in the city of Chengdu, located in China’s Sichuan province, to enroll their children in after-school or extracurricular lessons using the digital yuan central bank digital currency.

In order to enroll the program, parents pay a deposit to a private educational entity for a series of lessons, then a smart contract binds each lesson on a pro-rata basis to the deposit.  

The e-CNY payment is automatically credited back to their account via smart contract if student miss a lesson.

“The use of smart contract in digital yuan replace the role of regulatory authorities to monitor payment transactions between parents and private education entities,” Bank of China said in a statement.

Smart contracts are typically used in the crypto space on blockchain networks – and allow users to buy and sell products or services using a cryptoasset without the need for a third party.

Digital Yuan, also known as e-CNY, is intended to be alternative to the paper currency. Like the paper currency, China’s central bank- People’s Bank of China will govern and control the supply and distribution of digital currency. It will then issue and distribute the digital currency via different commercial banks.

China became the first major economy to begin exploring its own central bank digital currency (CBDC) in 2014, the country has taken the headline by rolling out trial issuance of a digital yuan in cities since 2019.

China’s central bank digital currency, or CBDC efforts have gained momentum since the beginning of this year.

In July, the Shenzhen Chamber of Commerce has recorded over 2.6 million signups for its latest digital yuan airdrop after the Shenzhen government announced a plan to airdrop 30 million of the e-CNY central bank digital currency to local residents.

In addition, the Bank of China rolled out an e-CNY airdrop program for the residents of the city of Chongqing as part of a local incentive to lower carbon emissions. Users receiving the airdrop can allocate their funds for scooter rides, food deliveries without packaged utensils, recyclable shopping bags and tickets to public transport.

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