The digital currency of China’s central bank can now be used to purchase insurance policies that provide various degrees of reimbursement in the event of a COVID-19 diagnosis or death.
The digital yuan, China’s nascent central bank digital currency, has already been used in many successful trial projects, ranging from e-commerce to salary payments and traditional festive lotteries.
The currency is making its debut in the insurance industry this week in Shenzhen. It is being tested by the People’s Bank of China’s local branch and a local unit of China’s largest insurer, Ping An.
The project entails creating a new insurance coverage targeted to medical staff in Shenzhen’s Nanshan district, which provides varying degrees of compensation in the event of a COVID-19 diagnosis or death.
According to the report, workers are being enticed to utilize the digital yuan wallet to pay their insurance premiums by the chance of a preferential allowance.
The pilot is significant, according to Wang Peng, an assistant professor at the Renmin University of China’s Gaoling School of Artificial Intelligence, because it extends the use of the digital yuan beyond e-commerce and retail payments and can demonstrate its feasibility in a much broader range of more complex application scenarios. Peng told reporters in his hometown:
- “As more users get used to making payments with the digital yuan and the market matures, the application scenarios will be able to expand from the insurance industry to more scenarios such as financial services, life services, and even the purchase of funds and trading in securities.”
According to reports, Ping An will continue to investigate the use of the digital yuan in the insurance sector for claims, payments, and other scenarios.
Following the submission of a letter by several senators requesting that officials from the United States Olympic and Paralympic Committee board prohibit U.S. athletes from using or accepting the Chinese digital currency, the digital yuan has entered the fray of geopolitical tensions between China the United States this week.
As a result, Chinese Foreign Ministry spokesman Zhao Lijian has called for a de-escalation of hostilities, urging senators to avoid politicizing sports and making a mess of China’s digital currency.