The Hong Kong Special Administrative Region has already begun discussions with the authorities in mainland China to begin the testing phase of the digital renminbi
The Chinese central bank and the Hong Kong Monetary Authority (HKMA) have started the preliminary phase of the digital yuan pilot project for cross-border payments, which is probably one of the CBDC’s main concerns.
In a press release published last Friday on the HKMA website, Managing Director Eddie Yue gave an update on the work on cross-border payments. He indicated that HKMA is in dialogue with the People’s Bank of China (PBoC) to launch the first phase of e-CNY.
„The HKMA and the Digital Currency Institute of People’s Bank of China are preparing tests for the use of e-CNY, the digital renminbi issued by the PBoC, to make cross-border payments and are making the related technical preparations“.
Tourists in Hong Kong and mainland China could benefit greatly from a digital renminbi according to Yue, as it represents the same value as cash already in circulation. And since the yuan is already used in Hong Kong, a digital equivalent would be quite affordable.
China continues to be at the forefront of CBDC development: according to figures from early November, its digital yuan pilot project would have processed transactions worth $300 million. The first tests were carried out in four major cities in April, and then expanded to nine other metropolitan areas.
In Hong Kong, the Special Administrative Region has been studying potential cases of CBDC use for at least three years. As Yue noted, in 2019 HKMA launched a joint research project with the Bank of Thailand to address various issues related to cross-border payments and digital currencies. Yue revealed that the project has entered its „second phase“, the phase dedicated to the operability and scalability of international CBDC transactions.
In the longer term, according to Yue, the aim is to build an integrated cross-border payment platform for the region:
„We have a good chance of building a regional platform for cross-border payments, also taking advantage of the global trend of strengthening cooperation in this area.