China wants to use crypto for insurance as it focuses on the adoption of digital yuan
Chinahas already implemented the digital yuan in the e-commerce space, salaries and lotteries.
- Expanding to insurance could make it easier for citizens to get accustomed to using digital yuan and for the central bank to understand how use cases play out in real life.
- For now, the insurance policy is meant for medical workers in the Nanshan district of Shenzhen who have been diagnosed with COVID-19.
AdvertisementChina is starting a new experiment with its new digital yuan, a central bank digital currency (CBDC) that runs on a blockchain platform controlled by the People’s Bank of China. And, this time, it’s dabbling with insurance.
The bank has announced a pilot project to extend the currency to the insurance sector, through a partnership with the country’s top insurer, Ping An, according to Global Times — a state-sponsored Chinese publication.
“The move aims to conduct a simulation exercise for the use of the digital yuan in more application scenarios and information systems,” Wang Peng, an assistant professor at the Gaoling School of Artificial Intelligence at the Renmin University of China, told the Global Times. C
China already uses the currency to make salary payments in the e-commerce sector and in lotteries. Adding insurance to the scheme is a significant sign of just how serious the country is about the digital yuan.
Using the digital yuan for medical insurance
In the current project, Ping An is offering insurance policies meant for medical workers in the Nanshan district of the Shenzhen area. The idea is to incentivize workers to use the digital yuan to make insurance premium payments by offering them preferential allowances. The policy offers a coverage of 300,000 yuan for death due to COVID-19, and 50,000 yuan for accidental deaths — or in cases where the patient has been diagnosed with the virus.
Such moves allow users to get accustomed to using digital yuan. While the regular user doesn’t necessarily see any difference between using a digital yuan and China’s paper currency, it also gives the People’s Bank more opportunity to understand how its blockchain platform will behave in actual use cases.
China could set the global benchmark
Insurance, for what it’s worth, is much more closely tied to a country’s economy than e-commerce or lotteries. While China’s goals may be to increase acceptance for its digital yuan, the experiment could also become a benchmark for how blockchain platforms function in the insurance space.
Experts have expected such platforms to enhance transparency and security for the insurance industry. “The added security and ability to establish trust between entities are two reasons why this technology can help solve the interoperability problem better than today’s existing technologies,” Deloitte said in a report earlier. It also noted that blockchain technology can reduce insurance fraud.
The journey of the digital yuan isn’t without its obstacles
The People’s Bank of China had also confirmed earlier that it would allow travelers and athletes to create their digital yuan wallets during the Winter Olympics next year. However, this has received pushback from three US senators, who cited concerns about the currency being used as a surveillance tool.
“Olympic athletes should be aware that the digital yuan may be used to surveil Chinese citizens and those visiting China on an unprecedented scale, with the hopes that they will maintain digital yuan wallets on their smartphones and continue to use it upon return,” senators Marsha Blackburn, Roger Wicker and Cynthia Lummis wrote to Olympic Committee board chair Suzanne Lyons.
For a more in-depth discussion, come on over to Business Insider Cryptosphere — a forum where users can deep dive into all things
Elon Musk is ready to accept Bitcoin for Tesla cars provided that renewable energy used for mining is 50% or higher
Bitcoin crashed to below $30,000 and managed to recover — but FUD still shadows the market
Popular on BI
- 911 dispatchers say skiers are accidentally setting off Apple's new crash-detection technology without realizing, triggering emergency calls
- The rally in stocks will trick investors into thinking the bear market is over, but there's still a case for the S&P 500 to fall another 26% next year, Morgan Stanley's Mike Wilson says
- Adani may be the richest Indian but Ambani’s RIL retains the top spot on Hurun's list of most valuable companies
- Here are the best apps and games on Google Play in India 2022
- Top 10 companies with the highest net profit in India as per Hurun 2022 list
- Rupee gains 8 paise to close at 81.22 against US dollar
- BYJU’s, Zomato, Dream11 among India’s most valuable PE/VC-funded companies as per Hurun
- GST revenues rose by 11% to ₹1.46 lakh crore in November: Finance Ministry