The Chinese Central Bank and the Hong Kong Monetary Authority (HKMA) are in the preparatory phase to test the digital yuan for cross-border payments. This underscores another important development in the introduction of a central bank-issued digital currency. or CBDC.
In a press release on the HKMA website on Friday, the managing director said, Eddie Yue informed about the ongoing work in connection with cross-border payments. He stated that the HKMA is in dialogue with the People’s Bank of China (PBoC) to start piloting the e-CNY.
“The HKMA and the Digital Currency Institute of the People’s Bank of China are discussing the technical pilot of the use of e-CNY, the digital renminbi issued by the PBoC, for cross-border payments and making technical preparations.”
Tourists from Hong Kong and mainland China could benefit greatly from the E-CNY, Yue said, as it represents the same value as the cash already in circulation. And since the yuan is already in use in Hong Kong, a digital equivalent would be a matter of convenience.
China continues to lead its CBDC development. In early November, pilots of the digital yuan processed $ 300 million in transactions. The first pilot projects were carried out in four major cities in April Expansion to nine metropolitan areas.
As for Hong Kong, The Special Administrative Region has been investigating possible use cases for CBDCs for at least three years. As Yue pointed out, The HKMA launched a joint research project with the Bank of Thailand in 2019 to address various concerns related to cross-border payments and digital currencies. Yue said this project has entered its “second phase” which will examine the functionality and scalability of the CBDC’s cross-border involvement.
Long term, Yue said the goal is to build an integrated cross-border payment platform for the region:
“In the long term, we have a good opportunity to build a regional platform for cross-border payments by taking advantage of the global trend to strengthen cooperation on cross-border payments.”