Chinese Banks Join CBDC-Social Security Card Campaign
Chinese state banks are set to join efforts to integrate the nation’s central bank digital currency (CBDC), the digital yuan, with government-issued social security cards.
Late last month, China’s Ministry of Human Resources and Social Security said it wanted to “explore and promote” ways to “add yuan digital payment functions” to cards.
Plastic cards are used as a form of identification at banks and government offices.
Some already have smart card functionality.
But Beijing is eager to issue new and improved “third generation” cards that will allow citizens, particularly the elderly and those living in rural areas, to make digital yuan payments with their cards.
Smartphone ownership numbers are relatively low among rural and older populations.
Many people in this demographic are also unbanked.
By the economic newspaper (via xinhua), several “commercial banks” have “began to explore” the notion of adding digital yuan functionality to new social security cards.
These include the Bank of China, one of the largest state-owned commercial banks in the country.
Banks such as the Bank of China were granted permission to issue social security cards with functions similar to bank cards in 2018.
But the Bank of China is now working on a “third generation” solution that will involve issuing cards that can double as digital yuan wallets.
Li Xin, Chief Business Manager of the bank’s Digital Currency Office, said the solution involves not only “physical cards” but also “wristbands, wearable tags and more.”
The bank also plans to expand the usage scenarios of the new “wallet cards” to payments and micropayments.
Portable cards, fobs or “wallets” will allow citizens to pay their bills, pay on public transport, settle medical bills in hospitals and even receive pension payments and other benefits.
Chinese banks look to merge offline CBDC wallets and social security cards
Li Xin said:
“The digital yuan is highly efficient, convenient, stable, secure, and widely applicable. Naturally, it fits with the new requirements of a social security system that covers the entire population, both in urban and rural areas”.
The commercial director stated:
“The deep integration of the digital yuan into social security [system] It is in line with current trends and the development of the digital economy.”
In a study conducted by China International Capital Corporation, researchers said they expected CBDC to experience “rapid development in the next three years.”
Chinese banks have been exploring “hard” offline CBDC wallets since late 2020.
A range of portable hard wallets will be distributed to athletes and supporters of the Asian Games in September., which will be held in Hangzhou, Zhejiang province.