FameEX Hot Topics | Bank of China Extends Digital Yuan Testing to Incorporate SIM Cards and NFC Payments

The Bank of China has joined forces with China Unicom and China Telecom in a strategic partnership aimed at conducting trials of SIM cards and near-field communication (NFC) payments associated with the digital yuan, which is also known as the e-CNY or renminbi. This collaboration signifies a significant advancement in the development of China's central bank digital currency (CBDC) infrastructure. Initially, the pilot program will be limited to specific regions and selected users, with compatibility restricted to Android smartphones.

The objective of this partnership is for the Bank of China to leverage the opportunities presented and enhance the capabilities of the digital yuan. The bank refers to the SIM card hardware wallet as a "hardware wallet," which allows users to install a designated SIM card provided by a  telecommunications operator, log in to the Digital Renminbi app, and activate the hardware wallet. Users can seamlessly access their digital yuan balance from both their primary wallet and the SIM card hardware wallet, eliminating the need for separate top-ups and providing a more convenient and user-friendly payment experience. Additionally, the hardware wallet supports offline payments, adding to its versatility.

The Bank of China is committed to capitalizing on the potential of SIM card hardware wallets and expanding the applications of the digital yuan. The bank intends to explore practical use cases across various industries, including but not limited to rail transportation, everyday consumption, academic settings, online shopping, utility payments, business retail, and educational training. By embracing the Internet of Things (IoT) trend, the bank aims to empower SIM cards, enabling them to interact with a wide range of IoT devices.

China has been actively promoting the adoption and integration of the digital yuan. Before its introduction for public transportation fares in Jinan, China, the digital yuan received support from the Shanghai Clearing House in late June. Currently, 11 countries have already launched their own Central Bank Digital Currencies (CBDCs), and research suggests that 130 countries, accounting for 98% of global gross domestic product, are considering implementing CBDCs. Notably, China's CBDC pilot test has reached a population of 260 million, covering various economic scenarios.

The expansion of the Bank of China's testing of the digital yuan through SIM cards and NFC payments signifies a significant milestone in the ongoing development of China's CBDC infrastructure. The strategic partnership with China Unicom and China Telecom demonstrates the bank's commitment to driving innovation and exploring practical applications of the digital yuan across multiple sectors. By integrating SIM cards and embracing the Internet of Things, the digital yuan has the potential to become even more widespread and transformative within China's digital economy.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.