An increasing number of Chinese banks are providing loans in the country’s central bank digital currency (CBDC), the digital yuan. The e-CNY is being integrated into more corporate financing options.
According to Nanhai Net via Hainan News, the Sanya Branch of the state-run Bank of Communications recently issued a $20 million digital yuan fixed asset loan to a company in Sanya, marking the first such loan in the city.
Banks across China are eager to utilize the CBDC and its smart contract capabilities for corporate finance.
The banks claim smart contracts and digital currency help them trace funds through every financing stage. They are using e-CNY more for green financing and other corporate loans.
Financial providers say recipients also benefit from faster, real-time transactions with CBDC loans.
However, banks appear to be the biggest winners. They say e-CNY allows precise control over cash flow and reduces misuse of funds. This means less money spent monitoring lending.
The Bank of Communications was among the first to join China’s CBDC pilot. It is now working on more “digital yuan application scenarios and integrated financial services.”
The bank aims to strengthen e-CNY promotion to offer customers “safer, more convenient, and more affordable financial services.” It has historically focused on commercial financing and securities since its 1908 founding.
So the digital yuan’s expansion into corporate loans reflects its increasing prominence in China’s financial sector.
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