China digital currency: BNP Paribas to promote digital yuan usage in China
- BNP to link client digital yuan wallets to bank accounts to up real-time use, plans roll-out in smart contracts, supply chain finance, and for utility and cross-border payments
- The fast expansion of e-CNY has forced foreign banks to rethink their strategies and consider the competitive advantage it could bestow, says consultancy Oliver Wyman
BNP Paribas is partnering with Bank of China (BOC) to promote China’s digital fiat money to its corporate clients, the French bank said in a statement on Thursday.
The collaboration allows BNP Paribas China to connect with BOC’s system and launch an e-CNY management system for its corporate clients. China has so far authorised 10 banks, all domestic lenders, to handle its digital currency business.
The system can “link [the client’s] digital yuan wallet to its bank account” to facilitate “efficient, real-time and convenient [digital cash] practice”, BNP said in the statement.
In addition, the French bank will explore expanding usage of China’s central bank digital currency (CBDC), to smart contracts, supply chain finance, and for utility and cross-border payments, it said.
“The collaboration has once again demonstrates our commitment to the China market, and we will continue to enhance our customer service capabilities through digital innovation and contribute to China’s economic development,” said BNP Paribas China chief executive CG Lai.
Wang Pengbo, senior financial analyst at consultancy BoTong Analysys, said that BNP Paribas China’s new move “will help promote the digital yuan and increase the range of options for users”.
China railway hub to use Belt and Road connectivity to promote digital yuan
BNP Paribas China follows in the footsteps of HSBC subsidiary Hang Seng Bank’s mainland arm, which in 2021 partnered with China Construction Bank, one of the 10 authorised e-CNY agents, to offer similar services to its corporate clients.
Beijing started exploring a potential sovereign digital currency in 2014, and one of its missions was to allow unbanked people, including those travelling from overseas, access to digital finance in China, according to a 2021 report by the nation’s central bank.
The fast expansion of e-CNY has forced foreign banks to rethink their strategies and consider the competitive advantage “once the digital yuan is used in cross-border business-to-business payment”, according to a report by consultancy Oliver Wyman.
Last year, the mainland, Hong Kong, Thailand and United Arab Emirates completed a 40-day trial of China’s digital currency, handling transactions worth over 150 million yuan (US$22 million) involving 20 commercial banks.
