China is mulling the application of its digital yuan \u2013 the central bank-backed currency also known as the e-CNY \u2013 to tackle persistent payment defaults, a move that would broaden the asset\u2019s scope beyond the set of use cases explored by Beijing since the currency\u2019s launch in 2019.<\/p>\n
Authorities in the central province of Hunan touched upon the subject when detailing plans to expand the digital currency\u2019s application scenarios and scale, according to a document published last month.<\/p>\n
Hunan will \u201cexplore using the digital yuan to clear chain debts\u201d through a model where funds can reach the end of the payment chain directly, the document said.<\/p>\n
While details at the moment are sparse, analysts suggested the digital currency could be used to ensure the often opaque relationships between payers and payees are more traceable and transparent.<\/p>\n
\u201cThis could potentially help enhance real-time visibility and control over transactions within the economy,\u201d said Tan Junyu, an economist at global trade credit insurer Coface.<\/p>\n