China’s central bank plans digital yuan pilot for payments to Hong Kong

China’s central financial institution and the Hong Kong Financial Authority, or HKMA, are within the preliminary phases of piloting the digital yuan for cross-border funds — underscoring one other key growth within the rollout of a central financial institution digital forex, or CBDC.

In a media launch that appeared on the HKMA web site on Friday, chief government Eddie Yue supplied an replace on the continuing work surrounding cross-border funds. He indicated that HKMA is in dialogue with the Individuals’s Financial institution of China, or PBoC, to start pilot testing the e-CNY.

Yue mentioned:

“The HKMA and the Digital Foreign money Institute of Individuals’s Financial institution of China are discussing the technical pilot testing of utilizing e-CNY, the digital renminbi issued by the PBoC, for making cross-border funds, and are making the corresponding technical preparations.”

Hong Kong and mainland Chinese language vacationers might enormously profit from e-CNY, Yue mentioned, as a result of it represents the identical worth as money already in circulation. And since the yuan is already utilized in Hong Kong, a digital equal can be a matter of comfort.

China continues to be on the forefront of CBDC growth, with its digital yuan pilots processing $300 million value of transactions as of early November. The primary pilot initiatives have been rolled out throughout 4 main cities in April earlier than increasing to 9 metropolitan areas.

As for Hong Kong, the Particular Administrative Area has been exploring potential use circumstances for CBDCs for not less than the previous three years. As Yue famous, HKMA launched a joint analysis challenge with the Financial institution of Thailand in 2019 to deal with varied considerations associated to cross-border funds and digital currencies. Yue mentioned this challenge has entered its “second stage,” which seems on the operability and scalability of cross-border CBDC participation.

In the long run, Yue mentioned the aim is to construct an built-in cross-border fee platform for the area:

“From a longer-term perspective, we have now a great probability of constructing a regional cross-border fee platform by driving on the worldwide pattern of strengthening cooperation in cross-border fee.”