PBoC Draws Hong Kong Residents Into e-CNY Test
As China recently proposed global rules for how central bank digital currencies (CBDCs) should operate, the country has taken its digital yuan pilot programme for retail transactions to a cross border level by inviting Hong Kong residents to join in its latest testing in Shenzhen.
The People’s Bank of China (PBoC) is likely to be the first major bank to issue a CBDC in the world as it has been working to internationalize the yuan and decrease dependence on the global system dominated by the dollar, according to Reuters.
The Shenzhen municipal government, the Shenzhen branch of PBoC, together with Bank of China and Bank of China (Hong Kong) jointly rolled out the pilot programme to test the e-yuan with Hong Kong residents in Shenzhen for retail payments.
According to a local report, the pilot programme is open to two types of Hong Kong residents – those with Hong Kong Identity Card who can apply for anonymous e-yuan wallets while those holding a Mainland Travel Permit for Hong Kong and Macau Residents (home return permit) can register for real-name accounts. A Hong Kong mobile phone number is required for the registration.
Several e-yuan tests have been carried out in the past to demonstrate the digital currency’s strength in terms of anonymity, security, and convenience, and paving the way for its use for cross-border payments.
The e-yuan’s test in Shenzhen is meant to provide Hong Kong residents living and working in the city the convenience and promote connectivity in the Greater Bay Area – which comprises the two Special Administrative Regions of Hong Kong and Macao.
The Area, which has a total population of over 72 million, a GDP of US$ 1,679 bln and a GDP per capita of US$ 23,371 (as at end 2019), also includes the nine municipalities of Guangzhou, Shenzhen, Zhuhai, Foshan, Huizhou, Dongguan, Zhongshan, Jiangmen and Zhaoqing in Guangdong Province.
In February, China and Hong Kong were identified as members of a joint CBDC project for cross-border payments initiated by the Hong Kong Monetary Authority, the Bank of Thailand (BOT), the Central Bank of the United Arab Emirates and the PBoC’s Digital Currency Institute of the People’s Bank of China.
The Multiple Central Bank Digital Currency (or m-CBDC) Bridge Project, which has the support of the Bank for International Settlements Innovation Hub Centre, was meant to push the development of a proof-of-concept (PoC) prototype, facilitate real-time cross-border foreign exchange payment-versus-payment transactions in a multi-jurisdictional context on a 24/7 basis and explore business use cases in a cross-border context using both domestic and foreign currencies.
The m-CBDC, as it aims to “transcend all borders”, opens a window for China to build on its global CBDC edge even with its series of pilots of the digital currency electronic payment (DC/EP) across major Chinese cities – now Shenzhen – ahead of a possible public rollout during next year’s Winter Olympics in Beijing.
The overall push aligns with the Asian giant’s perceived agenda to globalize its digital yuan.