According to rumors, China is considering adding digital yuan functionality to social security cards that are issued by the government. If true, this would represent a huge advancement for the central bank digital currency (CBDC) of China.
The Ministry of Human Resources and Social Security is reportedly interested in looking into how to include digital yuan payment capabilities in social security cards, according to the 21st Century Business Herald. These cards, which resemble bank cards with chips, already contain smartcard capabilities.
China’s banks have been permitted to produce social security cards since 2018 that can be connected to their own payment systems. Beijing recently revealed plans to digital these cards by 2027 as well.
Why Does China Want to Add CBDC Functions to Social Security Cards?
Social cards are frequently used by Chinese nationals as identification when applying for pensions, unemployment benefits, and health insurance.
According to officials, adding digital yuan payment capabilities to these cards will make the digital currency more approachable for a wide range of people.
The integration of state payments, benefit distribution, and identification functions into a single card will allow Chinese government organizations to modernize their operations and expedite processes.
An “Implementation Plan” outlining the Ministry of Human Resources and Social Security’s plan has been made public.
The ministry also recommends broadening the scope of banking services that can be accessed with social security cards.
Pilot projects have already used “hard” offline wallets in the form of wearables and smartcards to encourage inclusion.
During the forthcoming Asian Games in Hangzhou, which are scheduled for September of this year, a sizable number of wearable hard wallets will be presented to competitors and supporters.
People who oppose central bank digital currencies (CBDCs) have expressed worry that they would exclude individuals without cellphones.
Beijing, however, recently took action to make sure that adoption initiatives include “the elderly and children.”
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