Hospitals and Pharma Companies in China Use Digital Yuan
While the Chinese government continues to develop policies, the industries that utilize this technology have been looking forward to its integration into conventional payment systems. In addition, the Central Bank issued a circular in 2018 outlining its intentions for an online Yuan for cross-border payments and cryptocurrencies. The Chinese central bank is investigating the possibility as a digital medium of exchange will allow China to compete with traditional foreign currency transactions.
China plans to use CBDCs as digital currencies because they can be used as money transfer systems and payment methods while conducting cross-border transactions. By making the Yuan a digital currency that users can use overseas by using the yuan pay coin, the Chinese central bank is attempting to dismantle the status quo. China is tired of having to pay fees to banks worldwide when conducting transactions. China must forgo around 2-4% of each transaction as a penalty fee for using foreign currencies. The Central Bank Digital Currency can eliminate these fees.
Use of Digital Yuan in healthcare:
As for the health industry itself, there are opportunities for CBDCs that are very valuable in terms of efficiency and cost savings. For example, hospitals and pharma companies use healthcare protocols developed by the government to quickly import new drugs into their databases. These institutions often employ independent companies to compile, analyze, and verify this information. Once verified, these companies typically distribute the data to the hospitals or pharmaceutical companies that will use it.
While the verification process is streamlined and regulated by the government, health organizations spend significant time and money sending these data files across borders. However, if a CBDC is implemented for cross-border payments in China and worldwide, these exchanges will be instantaneous and inexpensive compared to foreign currency transactions.
Therefore, in addition to saving money on fees paid out overseas on behalf of medical industries, there are opportunities for increased revenue from digital payments made by consumers through the CBDC framework. Already, the use of digital currencies has increased exponentially in China. As a result, the popularity of these mobile payment options has increased dramatically, and the potential for a CBDC is promising. However, this time, the government is giving this policy much more attention because of the benefits to Chinese citizens and international commerce.
Digital Yuan can help in tracking the supply chain of pharma companies:
Given the multilevel nature of pharma supply chains, Digital Yuan will play a crucial role in validating the provenance of medicines and their components. For example, when drugs are manufactured in China, they frequently have ingredients from other countries.
However, these components can be sourced from anywhere and wind up at several different facilities before they are sent to the final manufacturer and ultimately to downstream distributors such as hospitals or pharmacies. Consequently, there is a chain of custody that requires various checks along the way and verification at each step. Unfortunately, this process is tedious and time-consuming given the number of steps involved in verifying every ingredient’s origin and quality standards, essentially increasing the time it takes to verify new drugs. To incentivize the creation of CBDCs, the Chinese government allows tax breaks and other incentives and removes various capital flow restrictions.
Additionally, a more efficient and reliable system like CBDCs can help pharmaceutical manufacturers to get their products to the marketplace more quickly. With quicker launches, competitors have less time to compete against these products in the marketplace. Finally, because CBDCs are unique from traditional money transactions, they can be seen as a “new way of thinking” by consumers and banks alike.
Hospitals can keep their confidential data safe with Digital Yuan:
In addition to the above, creating a CBDC will empower hospitals and pharmacists to use digital currency for cross-border payments effectively, which protects patient data and other sensitive information. In this situation, when payments are made, CBDCs can be used to ensure no control gaps concerning access to information and its confidentiality.
Hospitals already have systems that allow them to securely encrypt their data and determine the suitable measures for ensuring the safety of patient data. Because CBDCs can potentially replace existing frameworks, they have also worked hard to perfect new security protocols and technologies.
A lack of transparency, identity verification, and management plagues the health industry. However, digital transactions can be much safer than traditional monetary transactions if CBDCs are implemented in a way that protects information.
CBDCs have the potential to impact many industries, but some of them more clearly include healthcare, pharma, and finance. As the digital currency continues to gain momentum in these sectors, it will grow to gain traction in many other industries as well over time.
