SHANGHAI, June 17 (Reuters) - China's digital yuan can now be used in to buy wealth management products, pay for insurance policies, and extend bank loans, as the central bank further expands e-CNY's application beyond retail shopping, though still only in pilot schemes.
The People's Bank of China is a front-runner in developing and issuing a central bank digital currency (CBDC), which in the case of the e-CNY will be a traceable replacement for notes and coins.
It used in much the same way as current Chinese digital payment methods, with funds stored in digital wallets.
So far the main application has been for buying consumer goods and services in more than 20 pilot cities, but it is being increasingly used in financial transactions.
China Construction Bank Corp 601939.SS now allows customers to use e-CNY to buy wealth management products, according to the banks' mobile application.
Last week, a man surnamed Jiang made China's first purchase of automobile insurance policy using e-CNY, the official Securities Times newspaper reported.
And Agricultural Bank of China's 1288.HK601288.SS Suzhou branch extended 1.5 million ($220,000) of loans in e-CNY to a COVID-hit concrete producer this month, according to Xinhua Daily, another government newspaper.
China's digital currency was used to aid the struggling economy earlier. The southern tech hub of Shenzhen and Xiong'an New Area in northern Hebei province doled out digital cash to stimulate consumption in China's pandemic-hit economy.
"In the future, digital yuan can be applied in more scenarios such as medical treatment, education and finance," Zhang Ming, senior economist at the Chinese Academy of Social Sciences, wrote in a commentary for Xuexi Shibao, a publication of the Central Party School.
Transactions using e-CNY totalled 87.6 billion yuan at the end of 2021, with 261 million individual e-wallets opened, according to the central bank.
The developments "enriched application scenarios of the e-CNY," said Dan Wang, chief economist at Hang Seng Bank China.
"But I don't think the scale (of those applications) would be very large in the future," she said. "As the e-CNY positioned itself as M0 (currency in circulation), it's basically another form of cash."
(Reporting by Jason Xue and Andrew Galbraith; Additional reporting by Samuel Shen; Editing by Bradley Perrett)
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