Digital yuan pilots expand to insurance industry for the first time

China’s central bank digital currency can now be used on insurance policies that offer various levels of compensation for diagnosis of or death due to COVID-19.

China’s nascent central bank digital currency, the digital yuan, has already been deployed for an extensive array of successful pilot schemes, ranging from e-commerce to salary payments and to festive traditional lotteries.

This week has reportedly seen the currency debut in the insurance industry, in the city of Shenzhen, where it is being piloted by the local branch of the People’s Bank of China together with a local subsidiary of China’s leading insurer, Ping An.

The project involves a new insurance policy tailored to medical workers in Shenzhen’s Nanshan district, offering them various levels of compensation for diagnosis of or death due to COVID-19.

Workers are being incentivized to use the digital yuan wallet to make their insurance premium payments by being offered the prospect of preferential allowance, according to the report.

Wang Peng — an assistant professor at the Gaoling School of Artificial Intelligence at the Renmin University of China — has said that the pilot is significant as it extends the use of the digital yuan well beyond e-commerce and retail payments and can demonstrate its feasibility in a much wider range of more complex application scenarios. Peng told local reporters:

“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.”

Ping An will reportedly further explore the integration of the digital yuan for insurance claims, payments and other scenarios in the insurance sector.

This week has notably seen the digital yuan enter the fray of geopolitical tensions between China and the United States, following several senators’ submission of a letter requesting that officials from the U.S. Olympic and Paralympic Committee board prevent U.S. athletes from using or accepting the Chinese digital currency.

In response, Chinese Foreign Ministry spokesperson Zhao Lijian has called for a lowering of tensions, appealing to senators to “stop making sports a political matter and stop making troubles out of the digital currency in China.”