BNP Paribas, a French bank, has partnered with the Bank of China (BOC) to promote China’s digital currency, the digital yuan, to its corporate clients in China. The collaboration will allow BNP Paribas China’s corporate clients to connect with the BOC system and use an e-CNY management system to manage their digital yuan wallets, track transactions, and make payments using the digital currency. The move is in line with China’s efforts to promote the use of its central bank digital currency (CBDC) and expand its use cases beyond the country’s borders.
Efficient, Real-Time and Convenient Digital Cash Practice
The partnership will facilitate “efficient, real-time and convenient” practice of digital cash transactions, according to BNP Paribas. The e-CNY management system enables users to link their digital yuan wallets to their bank accounts, making it easier to use digital cash for real-time transactions. BNP Paribas China plans to explore the use of the digital yuan in other areas, such as smart contracts, supply chain finance, utility, and cross-border payments.
The move aligns with China’s goal to promote the digital yuan as a viable alternative to traditional payment methods, particularly in cross-border transactions, which are typically slower and more expensive.
In April, the Chinese city of Changshu announced that all civil servants within its jurisdiction would be paid their full salaries in digital yuan starting in May 2023. The move is part of China’s efforts to promote the use of its CBDC, particularly in everyday transactions. The payment terms apply to all civil servants in the public service and other state-owned units in the city. While the move is significant, it remains to be seen if it will lead to greater adoption of the digital yuan among the general public.
Lukewarm Response to the Digital Yuan Wallet in Hong Kong
Despite China’s efforts to promote the digital yuan, Hong Kong residents have not shown much enthusiasm for the government’s drive to promote the adoption of its CBDC. During the first four days of the hard launch of the digital yuan wallet, only 625 residents signed up, indicating a lukewarm response to the new digital currency offering.
The lack of enthusiasm could be due to various factors, such as concerns over data privacy, lack of trust in the digital yuan, and a preference for traditional payment methods. However, it is worth noting that the digital yuan is still in its early stages, and it may take time for consumers to fully embrace it as a payment option.
As with any new technology, widespread adoption takes time, and it remains to be seen whether the digital yuan will eventually become a preferred payment method for Hong Kong residents. The success of partnerships like the one between BNP Paribas and Bank of China could play a significant role in increasing awareness and usage of the digital yuan.
Conclusion
BNP Paribas’ partnership with the Bank of China to promote the digital yuan is a significant step in China’s efforts to expand the use of its CBDC. By collaborating with foreign banks, China is aiming to make the digital yuan a viable alternative to traditional payment methods in cross-border transactions. While the Changshu civil servants’ decision to be paid in digital yuan is a step towards greater adoption of the CBDC, it remains to be seen if it will lead to wider acceptance of the digital currency.
