Chinese Banks Launch Automatic Digital Yuan-to-Fiat Conversion Tools
Chinese banks are exploring new methods of enabling digital yuan users to earn interest on their central bank digital currency holdings – with “smart management” tools that can detect when funds have been left idle for long periods of time.
The central People’s Bank of China (PBoC) has repeatedly stated that the digital CNY’s main raison d’être is to function as a retail payments tool. As such, digital yuan wallets and their contents accrue no interest when not in use. However, anticipating perhaps that many customers are simply too busy to spend time converting digital yuan holdings into conventional fiat so that they can earn interest on their funds, some commercial banks in the country have developed solutions that automatic convert funds from digital yuan wallets into fiat, which is moved into deposit accounts.
Per Sina, the banks offering such service include the commercial giant the Industrial and Commercial Bank of China (ICBC), which is rolling out solutions in its app that allow customers to customize settings on their wallets – allowing AI and algorithms to “automatically” add digital yuan holdings above a certain amount (or left idle for a certain amount of time) to fiat saving accounts.
A similar solution has also been developed by the China Construction Bank (CCB), which also allows users to perform real-time top-ups from their fiat accounts in the event that they attempt a payment from their linked digital CNY wallets but have insufficient digital yuan funds to complete the transaction.
The CCB has named this function Automatic Combination Payment, and says that it will allow customers to choose the fiat accounts they want to link to their wallets in this manner. A maximum of around USD 743 worth of fiat can be
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