Blockchain for Banking News

Digital yuan pilot expands to include SME loans

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Last week, China’s Bank of Communications issued its first business loans using the country’s central bank digital currency (CBDC) as part of the latest digital yuan trials. Despite giveaways and other incentive programs, China’s CBDC pilot has seen moderate adoption. It continues to expand tests into new cities and broaden the use cases.

SME CBDC loans

According to Changsha Evening News, on May 12, three small and medium enterprises (SMEs) were selected in China’s Hunan province for a digital yuan pilot for “inclusive loans”. The test was conducted in Changsha, Hunan’s capital, and involved companies from the science and technology sector receiving funds totaling 583,000 yuan ($83,300). 

Changsha was one of the earlier cities involved in CBDC tests as part of China’s second set of pilot cities. There were only five participating regions when the original testing locations were announced in 2020, but that number has expanded rapidly.

The city started its testing in May 2021 with digital yuan giveaways and was one of the first regions to include offline payments and a hardware-based card wallet.

Broadening CBDC applications

Aside from SME loans, the central bank has also tested additional CBDC applications. Changshu – a city with 1.5 million people in Jiangsu province – recently confirmed that it would start paying government wages using the digital yuan. 

Earlier this month, BNP Paribas also announced a partnership with the Bank of China to launch a digital wallet for corporate clients. Most banks must work through other banks to gain access to the CBDC. Primary access is via the six large state-owned banks and the big fintechs Tencent-backed WeBank and Ant-backed MyBank, which is associated with Alipay.

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