Major Chinese state-owned commercial bank, Bank of China, will be testing a “smart contract solution” that enables parents of elementary school level children to pay for their children’s education using the digital yuan.
This initiative is being carried out in China’s central Sichuan Province, in the city of Chengdu. With the bank’s collaboration with Chengdu’s education and financial authorities, parents are able to use e-CNY to pay for their children’s pre- and after-school clubs, sports lessons, and extracurricular lessons.
In accordance with the program, parents use digital yuan to pay a fixed deposit. And then, the private contractors who run the clubs or offer the lessons place the funds into a “smart contract”. This contract is effective only when the child attends a club or lesson.
The contract is voided if the child missed a session, such as illness, in which the deposit is refunded to the parent’s e-CNY wallet.
Local education and financial authorities typically had to serve as middlemen in such cases. Before passing funds on to the private contractors, they have to keep track of the student attendance and collect payments from parents.
However, according to the Bank of China, adopting digital yuan smart contracts would enable regulatory authorities to remove themselves from the picture, and permit parents to directly make their payments to private contractors. The bank claimed that smart contract technology would help encourage payment transparency.
The bank added that it will distribute digital yuans tokens to Chongqing residents under the conditions that the coins are used for low-carbon emission products and services as payment, like public transport and plastic-free food deliveries.
