China Introduces Smart Contract Functionality for Digital Yuan to Boost Consumer Protection

Introduce smart contracts to CBDC

The Chinese government has enabled smart contract functionality for the digital yuan. The smart contract will automatically identify the order information on the e-commerce platform, and consumers will be able to win money by lottery.

The smart contract will be deployed on Meituan, a major Chinese e-commerce platform that sells everything from food to tickets.

When a consumer orders goods on Meituan and pays using a digital RMB wallet, the smart contract identifies the order information. If a specific keyword such as a store or product name is included, digital yuan will be distributed to the consumer’s wallet.

A total of about 170,000 yen (8,888 yuan) will be awarded each day, and this is the system that will be distributed among the winning consumers. Keywords change daily.

The digital yuan is a CBDC (central bank digital currency) developed by the People’s Bank of China since 2014. Since the latter half of 2020, large-scale demonstration experiments are being conducted in various parts of China.

The digital yuan is also known as e-CNY, e-Yuan, and DCEP (Digital Currency/Electronic Payment).

Pre-payment solution also implemented

In September 2022, the People’s Bank of China’s Digital Currency Research Institute also announced a prepayment solution using smart contracts for digital yuan wallets.

According to Di Gang, deputy director of the institute, the solution will keep the money prepaid by the consumer in the consumer’s account before the business completes the provision of the service or product. .

After completing the provision of services and products, the system transfers money to the account of the business operator, and the business operator cannot withdraw money from the consumer’s wallet.

In traditional prepaid schemes, prepaid money is placed in a company’s account before the service is provided. Gang said this could have put consumer rights at risk.

The solution is said to help reduce the risk of fraud and breach of contract and strengthen consumer rights protection. Local experts are paying attention to it as one of the possibilities of renminbi smart contract functions.

Currently, this prepayment system is already being used in the field of education. The system pays the educational institution each time the student takes a lesson, and before the lesson is completed, the money belongs to the consumer.

Gang also explained that the prepayment solution will be gradually expanded from the education sector to more sectors such as retail, catering and sports. The introduction on the Meituan platform this time seems to be part of that.

People’s Bank of China Deputy Governor Fan Yifei also said last year that the smart contract of the digital yuan will help develop the digital economy, improve transaction transparency, reduce the risk of breach of contract, improve operational efficiency, optimize regulatory capacity, etc. said it would help.

Inclusion of the digital yuan in official statistics

The People’s Bank of China included the digital yuan in its official statistics for the first time this month. As of the end of December, the circulation of e-CNY (digital yuan) was 13.61 billion yuan (about 260 billion yen), and the total M0 (cash and reserves held by the central bank) (10.47 trillion yuan) / about 200 trillion yen) accounted for 0.13%.

Relation: People’s Bank of China to include CBDC in ‘official statistics’ for the first time

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