CHINA’S digital yuan can now be used to buy wealth management products, pay for insurance policies and extend bank loans, as the central bank further expands e-CNY’s application beyond retail shopping, though still only in pilot schemes.

The People’s Bank of China is a front-runner in developing and issuing a central bank digital currency (CBDC), which in the case of the e-CNY will be a traceable replacement for notes and coins.

It used in much the same way as current Chinese digital payment methods, with funds stored in digital wallets.

So far, the main application has been for buying consumer goods and services in more than 20 pilot cities, but it is being increasingly used in financial transactions.

China Construction Bank Corp. now allows customers to use e-CNY to buy wealth management products, according to the banks’ mobile application.

Two weeks ago, a man surnamed Jiang made China’s first purchase of automobile insurance policy using e-CNY, the Securities Times newspaper reported.

Agricultural Bank of China’s Suzhou branch extended 1.5 million (US$220,000) in loans in e-CNY to a COVID-hit concrete producer this month, according to the Xinhua Daily newspaper.

China’s digital currency was used to aid the economy earlier. Shenzhen and Xiong’an New Area in northern Hebei Province doled out digital cash to stimulate consumption in China’s pandemic-hit economy.

“In the future, digital yuan can be applied in more scenarios such as medical treatment, education and finance,” Zhang Ming, senior economist at the Chinese Academy of Social Sciences, wrote in a commentary for Xuexi Shibao, a publication of the Central Party School.

Transactions using e-CNY totalled 87.6 billion yuan at the end of 2021, with 261 million individual e-wallets opened, according to the central bank.

The developments “enrich- ed application scenarios of the e-CNY,” said Dan Wang, chief economist at Hang Seng Bank China.

“But I don’t think the scale [of those applications] would be very large in the future,” she said. “As the e-CNY positioned itself as M0 [currency in circulation], it’s basically another form of cash.” (SD-Agencies)