Financial authorities in Hong Kong have announced the second phase of trials of mainland China’s digital currency. As part of upcoming trials, the city will connect the Chinese digital yuan to its domestic payment system to evaluate the usefulness of CBDCs in cross-border scenarios.
Hong Kong residents to load e-CNY wallet through mobile phone
China has gained considerable ground in its effort to develop and implement a central bank digital currency.CBDC) and while officials in Beijing have indicated that e-CNY is a domestic project at this stage, cross-border trials have been initiated in the Hong Kong Special Administrative Region.
Following initial small-scale experiments with a digital yuan wallet, the latest testing round will examine how Hong Kong residents can load an e-CNY wallet using the city’s faster payment network, Reuters reported. The system is currently processing home payments ordered through mobile devices.
The new tests were announced during a press conference on Tuesday. Speaking to the media, the Chief Fintech Officer of the Hong Kong Monetary Authority (HKMA), Nelson Chow elaborated that “this will help Hong Kong residents use e-CNY when crossing the border.”
HKMA to examine feasibility of retail-focused CBDC
The HKMA previously disclosed that it is working on the implementation of a CBDC to streamline cross-border interbank payments. This week, the regulatory body said it would issue a paper to explore the viability of retail-focused CBDCs within a year.
The document will review potential use cases for e-HKD that Hong Kong may decide to create. Hong Kong’s Central Banking Institute said matters related to data privacy and anti-money laundering standards would also be the focus of the study. HKMA CEO Eddie Yu commented:
People have become very used to digital payments now, and if other central banks are exploring potential use cases for CBDCs… you will have to try it to see if you can make it a success.
The report further noted that HKMA continues its cross-border CBDC trials in parallel with other consumer-focused projects. The central banks of China and the United Arab Emirates have joined a wholesale CBDC pilot conducted by HKMA and the Bank of Thailand earlier this year.
Meanwhile, the People’s Republic is moving forward with its own digital currency trials. authorities in the capital this month Beijing and city Shanghai announced plans to spread the digital yuan worth more than $9 million in red envelope lottery. Winners who receive the handout will have the opportunity to spend funds at merchants that are already accepting CBDC payments.
Do you think China is planning to expand the use of the digital yuan in cross-border transactions? Share your thoughts on this topic in the comment section below.
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