China launches new digital yuan framework as operating network expands to 30 institutions
Key Facts
The Digital Yuan Operations and Management Center announced the launch of a central bank system and a smart contract services framework at the annual digital yuan conference at the Financial Street Forum on 21 October 2026, according to Beijing's local financial administration. The launch is part of the development of a platform combining payment services and digital currency management, with applications including corporate transactions and trade finance. People's Bank of China Governor Pan Gongsheng said the platform brings issuance management and retail and wholesale payment services together in an integrated system. The system also includes blockchain and smart contract services, according to the text of his speech published by the State Administration of Foreign Exchange. The governor described it as a "comprehensive platform for digital yuan operations," bringing these services together within the infrastructure dedicated to its operation.
The development of the technical infrastructure is accompanied by a change in the central bank's classification of the digital yuan. Pan said, according to the text of his speech, that "the digital yuan's classification has shifted from cash to deposit money." The number of operating institutions has risen from 22 to 30, according to a report published by Wuhan's local financial administration. Banks' preparations to accommodate this expansion are reflected in a project put forward by Huichang Bank to build systems dedicated to digital yuan operations. The project includes a transaction center, a core system and a smart contract system, alongside front-end systems and testing, according to the same report. The bank's preparations thus span transaction processing, core infrastructure and contract execution, with system testing included in the scope of the proposed project.
In corporate transactions, financial authorities in Hunan province documented the use of smart contracts to settle interconnected debts among companies using different banks. The application involves defining settlement arrangements in advance, including the route funds take between the parties concerned. The specified conditions include debt repayment amounts, as well as the conditions under which payments are executed. The provincial financial commission's office said the application involves "specifying the sequence of fund flows, settlement amounts and execution conditions in advance." This use places smart contracts within the settlement of corporate obligations, linking the movement of funds to repayment arrangements agreed across participating banking institutions.
In consumer spending, Jiangsu province uses smart contracts to control the disbursement of consumption vouchers denominated in digital yuan, according to program rules published by the provincial commerce department. These contracts restrict the use of funds to their designated purpose within the program. When the vouchers expire, the system automatically recovers the unused balance. The department described the voucher mechanism as ensuring "targeted use and automatic recovery upon expiry," with oversight of funds throughout the program's lifecycle. The contract's role in this application extends from specifying permitted spending destinations to handling the remaining balance after the usage period ends, within closed-loop management of voucher funds.
Existing applications extend to cross-border trade finance, according to an account of a transaction carried out by Bank of Communications documented by Shanghai's government service platform for companies operating overseas. The bank used a cross-border trade finance platform to disburse digital yuan financing with embedded smart contracts. The funds were routed across borders to the counterparty's wallet, under the arrangement outlined by the government platform. The platform said the transaction involved "disbursing digital yuan financing and attaching smart contracts, while routing funds across borders to the counterparty's wallet." This application combines the provision of financing in digital currency with the incorporation of smart contract conditions into the amount disbursed, through to its payment to the counterparty in the trade transaction.
In the next phase, those overseeing the cross-border trade finance system intend to broaden the participation of trade platforms, financial institutions and industry bodies in its development, according to the Shanghai government platform. The initiative includes supporting trade platforms from additional regions in joining the system's joint development. At the central bank level, announced priorities include improving the functions and services of the Cross-Border Interbank Payment System, according to the transcript of a State Council Information Office briefing published by the State Administration of Foreign Exchange. Plans also include strengthening links between fast payment systems and QR code payments. As part of these priorities, the bank affirmed its efforts to "encourage the use of the digital yuan in cross-border transactions," alongside the development of payment services and links between their systems.