Based on the results of the use of smart contracts with e-CNY in government and commercial projects, the Central Bank of China has come to a decision on the wide integration of the digital yuan into the country’s economy.
Mu Changchun, head of the Digital Currency Institute of the People’s Bank of China (PBOC), said the regulator plans to roll out more smart contracts for the digital yuan (e-CNY) as more applications for the national digital currency are revealed during testing. The CEO noted that e-CNY smart contracts are already being used in government subsidies, retail marketing and fund management.
The decision is in line with the institute’s white paper last year, which said e-CNY would gain programmability by “deploying smart contracts that don’t disrupt the monetary functions of the CBDC,” the official said. Mu added that the “guaranteed execution” nature of smart contracts requires robust template management, otherwise it could pose risks to economic and financial stability:
“Smart contracts must pass conformance tests before being turned into templates and models. The NBK is working on creating a platform for checking and registering smart contract models.”
According to Mu, the introduction of e-CNY can effectively reduce the cost of economic activity.
Last year, the PBOC stated that smart contracts on e-CNY are traceable, self-acting contracts that enable contingent and guaranteed payments and other complex use cases, and can “promote business model innovation.”
In August, information appeared that Chinese banks were gradually moving to processing and issuing loans to individuals and industrial enterprises in China’s state digital currency.
