French financial services company BNP Paribas said Thursday that it has partnered with the Bank of China (BOC) to promote Chinese digital fiat currency to its business customers.
Through the agreement, BNP Paribas China can now easily connect its system to the BOC system. It can also provide its customers with an electronic Chinese yuan management system. China has commissioned ten local financial companies to manage the digital currency market.
According to BNP, their system can link a customer’s digital yuan to their bank account. This will make real-time use of digital cash simple and efficient.
BNP Paribas Is Exploring the Use of CBDC
The French financial institution has also expressed interest in exploring how China’s central bank digital currency (CBDC) could be used. Applications such as smart contracts, supply chain financing, cross-border payments, and energy payments were of interest.
BNP Paribas China CEO C.G. Lai said this partnership shows how committed the company remains to the Chinese market. They want to improve customer service through digital innovation and help grow China’s economy.
“Our main goal is to improve customer service through digital innovation, and we also want to support China’s economic growth.”
– BNP Paribas China CEO C.G. Lai
Digital Yuan Continues to Grow in Popularity
Wang Pengbo, an experienced financial expert at BoTong Analysys, believes BNP Paribas China’s recent move will make the digital yuan more popular and give people more opportunities.
BNP Paribas China recently said it would partner with one of the ten approved e-yuan agents, China Construction Bank, to offer similar services to its customers. The move is identical to what HSBC-owned Hang Seng Bank’s office did in 2021.
According to a report published by China’s central bank in 2021, Beijing began exploring the possibility of creating a sovereign digital currency in 2014. One of the aims of this study was to facilitate the use of digital banking services in China. The initiative was aimed at people without bank accounts, especially those from other countries.
Global Banks See Real Benefits in the Digital Yuan
According to a study by Oliver Wyman, the rapid growth of e-CNY has forced global banks to rethink their strategies. They have also reflected on the potential economic benefits that could arise “when using the digital yuan for cross-border B2B payments”.
The Chinese digital currency has recently been tested in several countries, including China, Hong Kong, Thailand, and the United Arab Emirates. According to Yahoo.com, twenty commercial organizations took part in the trial, which lasted forty days and resulted in successful transactions worth more than 150 million yuan (about US$22 million).
Electronic Payment also called the domestic form of digital yuan, is being tested in 26 cities and districts across 17 provinces. The technology is used in many areas, such as shopping, transport, and wages.
According to the latest PBOC report, 13.6 billion digital yuan will be in circulation by the end of 2022.