In a recent incident, adding to the increasing popularity of Chinese central bank digital currency (CBDC), more firms are accepting digital Yuan. Reportedly, an increasing number of firms are using digital Yuan to access funding for “green” business projects.
According to local media reports, an electronics firm in Guangdong Province, Southeast China, became the first company in the province to access a digital Yuan powered “green finance” loan as “application scenarios of the digital yuan continue to expand.” The firm, which is named Zhongshan Jewelly Optoelectronics Technology, appears to have obtained its financing package from the Guangzhou Branch of the central People’s Bank of China (PBoC).
Reportedly, the package is worth over $276,000 and was issued to the company’s corporate digital Yuan wallet. Sources reveal that Zhongshan Jewelly specializes in LED devices and modules, and produces a range of energy-saving lamp chips. Commenting on the recent event, the firm said:
Recently, our orders have increased and capital demand is also high. This digital CNY green loan funding provides us with a new way of financing and making settlements.
Furthermore, sources suggest that the “industry insiders” are testing the application of digital Yuan in the field of green finance could allow banks to exercise “precise control over the flow of funds.” They also stated that this would help “ensure the authenticity and credibility of the closed-loop circulation of green financial funds.”
According to local media reports, the “industry insiders” have claimed that the PBoC coin’s traceability functions would “prevent green funding loans from being misappropriated.”
They added that it would also help slash the “high costs” for banks, who typically have to spend a great deal of money on “monitoring the flow of green financing funds.” The insiders also claimed that firms also stood to benefit.
The people familiar with the matter said that the enterprises could use the digital CNY “for payments and settlements” without having to “pay handling fees and service fees.” Notably, funding also “arrives in real-time,” and helps “reduce the capital cost of enterprises, as well as improving the efficiency of capital turnover.”
China has been making remarkable progress in the CBDC arena with consistent efforts and pushes from the government. While the Chinese government has been working on CBDC for sometime, Guangdong Province joined the digital Yuan pilot in December 2022.
The Guangzhou Branch of the PBoC said that the it would seek to realize more digital Yuan-powered green loans, and “expand the application scope of the digital yuan in the field of green financing.”
It is worth noting that respective jurisdictions in China have their own way of promoting CBDC adoption. As reported by Todayq News, the the Chinese city of Shenzhen claims that its residents have opened almost 36 million digital Yuan wallets. Similarly, from January to June 2023, individuals and firms settled in Hunan Province “successfully” used the digital Yuan to pay a cumulative total of $51.3 million worth of taxes.
Notably, all these developments come just months after Changsha authorities claimed that over 420,000 merchants in the city now accept payments in the CBDC. The CBDC payment options has been very innovatively added to all bus routes in Jinan, capital of Shandong Province. Along with other ways like giveaways etc., Changshu decided to hand salary to civil servants in digital Yuan from May 2023.