Chinese telecom operators are reportedly showing strong interest in adopting the digital yuan, according to a recently published report. The country’s central bank, the People’s Bank of China (PBoC), aims to involve major operators like China Telecom and China Unicom in its pilot program, believing that their participation will contribute to a wider adoption of the central bank digital currency (CBDC).
Earlier this month, the PBoC introduced an offline SIM card-based digital yuan wallet solution, allowing users to transact with the CBDC even without network coverage or powered-up phones. Although the current solution is only available for Android smartphone users, there are discussions about expanding options for 2G mobile phone users, who are prevalent in China’s rural areas, particularly among the elderly population.
The availability of SIM-based digital yuan solutions is expected to cater to these less technologically savvy communities. EY, the professional services firm, states that the SIM-based solution’s “threshold for use” is very low, addressing the needs of specific groups such as the elderly and children. This move towards digital yuan adoption is aligned with the PBoC’s objective to bridge the digital divide and promote financial inclusion. SIM-based wallets are also considered to have enhanced security key management functions and encryption algorithms compared to software-based solutions.
Chinese telecoms firms view the digital yuan integration opportunities not only as a long-term product for development but also potentially across their 5G and Internet of Things (IoT) offerings. They are exploring integration with their payment networks, enabling connections with smart utility meters, public energy grids, shared bicycles, and smart electronics-charging stations. Shenzhen, one of the cities at the forefront of the digital yuan pilot, recently reported that over 36 million digital yuan wallets have been opened in the city so far.