Hong Kong’s central banking institution, the HKMA (Hong Kong Monetary Authority), and the PBOC (People’s Bank of China) is preparing to pilot test the digital yuan for cross-border payments. China continues to lead in terms of CBDC development. In early November, the digital yuan had already processed transactions worth $300 million. The first pilot was initially conducted in four cities with later on moving to nine metropolitans.
PBOC, HKMA Plans Digital Yuan Pilot
Hong Kong had been exploring CBDCs for the past three years. Last year, the HKMA had launched a joint research project with the Bank of Thailand, to address the concerns on cross-border payments and digital currencies. The project is in the second stage and will look into the operability and scalability of cross-border CBDC.
On Dec. 4, the chief executive at HKMA, Eddie Yue updated in a press release that:
“The HKMA and the Digital Currency Institute of People’s Bank of China are discussing the technical pilot testing of using e-CNY, the digital renminbi issued by the PBoC, for making cross-border payments, and are making the corresponding technical preparations.”
Yue stated that in the longer term, the intention is to create a regional cross-border payment platform:
“From a longer-term perspective, we have a good chance of building a regional cross-border payment platform by riding on the global trend of strengthening cooperation in cross-border payment.”
As per the statement, there is no clear timeline for the official launch of the digital yuan.
Both Hong Kong and China Can Benefit from e-CNY
According to Yue, both Hong Kong and China can benefit from the e-CNY as it represents the same value as cash is already in circulation. Since the yuan is already used in Hong Kong, hence a digital equivalent will be convenient for everyone.
In October, The Bank of China had launched a lottery worth $2.5 million of PBOC-issued digital yuan. The move aimed to encourage users to download the digital wallet and use the e-CNY to trail the digital currency. It was available only for the citizens in Shenzhen, one of the closest Chinese cities to Hong Kong.