Source: Vitalii/Adobe
More Chinese banks are expanding their services to include digital yuan loans, the nation’s central bank digital currency (CBDC). According to Nanhai Net, this latest development was seen on the island of Hainan in the city of Sanya, where the state-run Bank of Communications issued a digital yuan fixed asset loan worth over $20 million to a local organization. This marks the first time a CBDC loan has been issued by a city bank.
Financial institutions are increasingly utilizing smart contracts and digital fiats for corporate financing, due to the advantages it offers. They can track money through the entire financing process and use it for green financing, corporate loans, and other loan types. The CBDC is also beneficial to recipients since it speeds up loan transactions, allowing firms to receive their funds in real-time.
The Bank of Communications is the first Chinese bank to join the CBDC Pilot and is currently working with several parties to construct new digital yuan application scenarios and integrated financial services. The bank plans to strengthen its digital yuan promotion and application efforts in order to provide customers with safer, more convenient, and more affordable financial services.
Established in 1908, the Bank of Communications is a commercial lender and securities provider with a long history. It is likely to benefit from the use of CBDC loan deals, as they allow banks to exercise precise control over the flow of funds and reduce the risk of misappropriation. Additionally, they can spend less on monitoring the funds they lend to companies.
