More Chinese banks plan to use the CBDC to finance supply chains by implementing smart contracts driven by the digital yuan in their business operations.
The Agricultural Bank of China will work on a solution with Luzhou Laojiao, according to Xinhua (via the People’s Daily).
The latter is a conventional Chinese distillery for alcoholic beverages located in Luzhou, Sichuan Province.
In Beijing in 2023, the companies displayed their CBDC-based solution at the China Digital Finance Forum.
According to Luzhou Laojiao, when dealing with dealers nationwide, it encounters the “three” supply chain-related “difficulties” that CBDC-powered solutions will aid in resolving.
These include concerns with “downstream dealers,” trouble with managing bank loan funds, and issues with getting loans for small and micro businesses.
The People’s Bank of China’s (PBoC) Digital Currency Research Institute, according to the bank, invented the digital yuan smart technology.
The Agricultural Bank was able to “develop a digital yuan smart contract supply chain” as a result of this.
According to reports, the product will “provide convenient loan services” for local Luzhou Laojiao affiliates.
The companies said that the technology enables the distillery’s retail locations to “obtain loan funds within a few minutes.”
Banks, on the other hand, stand to gain from keeping money in a “closed-loop” system.
According to the parties, payments are completed instantly, and the funds can be fully tracked.
Chinese banks will Finance Supply Chains using Digital Yuan
According to the Agricultural Bank, its solution offers “meaningful and powerful data support for enterprise operation and management,” which will “help Luzhou Laojiao rapidly develop its sales network.”
Under “the guidance of the PBoC,” the bank stated that it will aim to “continue to leverage the benefits of the digital yuan.”
Additionally, it declared that it would keep using e-CNY smart contracts to “empower enterprises.”
Additionally, the bank intends to deploy the digital fiat with “government organs, businesses, and researchers.”
The first “prepayment product” in China using digital CNY smart contracts was “officially” co-launched in September by the government-run Postal Savings Bank of China.
The Chinese software company Tencent also introduced a digital yuan smart contract service for small, medium, and micro-sized businesses earlier this month.
