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State-owned institution Bank of China has just rolled out an educational program that incorporates the nation’s digital Yuan and smart contracts. The Bank of China hopes the new feature could help mirror the possibility of using smart contracts in payments.
The central bank’s announcement emerged on Tuesday, August 16 via local news outlet Sohu.com.
The Longquan Education and Training Program
According to the report, the country’s decision to leverage smart contract technology in the education sector is the latest in its resolve to increase digital participation.
The new initiative focuses mainly on primary school education and is called the “Longquan Education and Training” program. Local education and fiscal authorities Chengdu Longquanyi District Education Bureau and Chengdu Tianfutong Financial Services Co.Ltd were heavily involved. Notably, the People’s Bank of China also played a large part in the initiative.
Beneath the new program, residents of Chengdu in China’s Sichuan province can have their children attend after-school or extracurricular classes. This will require the parents to put down a deposit in China’s central bank digital currency, the digital yuan (e-CNY). The payment will go to a private entity in the educational sector and will cover a specific number of classes.
How e-CNY Payments Work
According to the report, the project brings a digital RMB payment system onboard for the payment process. After deposits have been sent in, a smart contract will bind each prospective class according to the funds. Thus, if a pupil misses a class, the smart contract automatically refunds the e-CNY deposit in the parent’s account.
The release explained:
Under the newly released smart contract framework of the Digital Currency Research Institute, is the purchase of prepaid cards, the generation of smart contracts, and the write-off of prepaid cards. With functions such as card refund and inquiry, it can also realize functions such as ‘one sale for one lesson, and refund for unused fees’.”
Advantages and Potential Use Cases
Reportedly, the program also creatively unveils and employs the benefits of digital RMB smart contracts. Indeed, it might leverage them as an answer to the question of financial supervision in the educational sector.
Additionally, the new initiative evades the risk of frozen accounts and takes advantage of the crypto zero rates to lessen the financial pressure on educators.
In their announcement, the Bank of China explained the aims of the smart contract project. With the Longquan Education and Training program, the Bank of China is probing into the usefulness of e-CNY smart contracts:
The program seeks to explore the benefits brought forth by e-CNY smart contracts. One potential use case is replacing the role of regulatory authorities to monitor payment transactions between parents and private education entities.”
Likewise, the e-CNY smart contracts could function in the place of regulatory authorities to monitor financial exchanges between parents and private education entities. Yet another possible use case is to improve transactional liquidity using the zero transaction fees contained in the e-CNY design.