Chinese Telecoms Firms Growing Increasingly Keen on Digital Yuan
Per EY (via Sohu), the central People’s Bank of China (PBoC) is keen to bring the nation’s biggest operators (the likes of China Telecom and China Unicom) deeper into the pilot.
The PBoC reportedly believes telecoms firms can help boost adoption.
Earlier this month, the central bank unveiled an offline SIM card-based digital yuan “hard” wallet solution.
The solution lets users pay with the CBDC, even if they have powered-down phones or have no network coverage.
While the solution is currently only available for Android smartphone users, there is a possibility that telecoms firms and banks will look to expand options for 2G mobile users.
2G phone ownership is highest in China’s rural communities, particularly among the elderly.
And these communities tend to be the least tech-savvy of all in China.
This is another reason why SIM-based digital yuan solutions could soon take off in the nation.
EY claimed that the SIM-based solution’s “threshold for use” is “extremely low.
The firm wrote:
“This would help solve the problem of [smartphones] for certain groups such as the elderly and children.”
Why Are Chinese Telecoms Firms Warming to the CBDC?
The central bank has repeatedly claimed that the token will help “make up for the ‘digital divide” and boost “financial inclusion.”
Furthermore, EY claimed, SIM-based wallets have superior security key management functions.
They also support encryption algorithms that boast “a higher security level than software-based solutions.”
Major telecoms firms have already expressed their willingness to work with the PBoC on the SIM wallet solution.
They reportedly already “regard it as a key product for [their] long-term development.”
EY added that the telecoms firms also hope to integrate the digital yuan into their 5G and Internet of Things (IoT) offerings.
They are also exploring ways to integrate the token into their own payment networks.
This means wallets could be linked to smart utility meters and public energy grids, as well as shared bicycles and smart electronics-charging stations.
Earlier this week, the city of Shenzhen claimed that over 36 million digital yuan wallets have been opened in city limits to date.