Parents In China Will Use Digital CNY “Smart Contracts” To Pay For Lessons After School.

A commercial bank in China that is owned by the state plans to test a “smart contract solution” that is driven by the digital yuan and will provide parents of elementary school students the ability to pay for their children’s education with e-CNY.

According to a report from a news organization known as The Cover, the program was conceived by the Bank of China, which is one of the “big four” state-owned commercial banks in China. The city of Chengdu, which is located in the Sichuan Province in central China, is where the project is being carried out. The bank has formed a partnership with the education and financial authorities in Chengdu, and as a result, parents will soon be able to use digital currency to pay for their children’s pre- and after-school clubs, as well as extracurricular activities and sports classes.

In order to participate in the scheme, parents must first make a fixed deposit using digital yuan. After that, the payments are deposited into a “smart contract” with the independent contractors who are in charge of operating the clubs or providing the instruction. This agreement becomes active only when the child is enrolled in a class or program of some kind.

If, for example, the child is absent from a session due to illness, the contract will be nullified, and the deposit will be transferred back to the parents’ e-CNY wallet.
In the past, local education and finance authorities were required to take on the role of mediators in circumstances such as these. Their responsibilities included tracking student attendance and collecting payments from parents before transferring those monies to private contractors. On the other hand, according to a statement attributed to the Bank of China, the utilization of digital yuan smart contracts would enable regulatory agencies to withdraw from the equation, so enabling parents to make their payments directly to the private contractors. The bank hypothesized that the technology of smart contracts will help increase transparency in financial transactions.

Even though smart contracts are most commonly seen in the blockchain and cryptocurrency spaces, the People’s Bank of China (PBoC), the country’s central bank, believes that it will be able to apply the technology behind smart contracts in its very own e-CNY project. The title of at least eight of the patent applications that the PBoC has submitted in the past includes the phrase “smart contract.”

After the universal implementation of the digital CNY, financial experts in China have asserted that the country’s payments system may be able to make use of the smart contract technology that is currently available.

Residents of Chongqing will be offered free digital yuan tokens by the Bank of China, on the condition that they only use the coins to make payments for goods and services that have low carbon emission levels. Some examples of these goods and services include plastic-free food delivery and public transportation.

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