Chinese Central Bank to Expand Digital Yuan Pilot in Hong Kong

The central People’s Bank of China says it plans to expand its “cross-border” digital yuan pilot in Hong Kong.

Per a Weibo post from the media outlet Caixin, and a report from The Paper, the Deputy Governor of the PBoC Xuan Changneng said the bank wants to “deepen the cross-border e-CNY pilot” in Hong Kong.

Xuan said doing so would “boost the convenience” of firms based both in Hong Kong and Mainland China.

He added that the PBoC would “work closely” on the matter with the Hong Kong Monetary Authority (HKMA). The latter is Hong Kong’s central bank and top financial regulator.

Xuan said the PBoC and the MKMA would “jointly promote” a range of new “policy measures” to drive CBDC adoption.

These will include new CBDC-powered financial services and cooperation measures, the Deputy Governor explained.

How Will Mainland China and Hong Kong Expand Digital Yuan Cooperation?

Xuan mentioned several areas where the PBoC and the HKMA plan to cooperate in the near future as they look to expand the e-CNY’s reach. These include the following:

• Provide further support for institutions who want to “participate in the pilot”
• Boost convenience for digital yuan users
• Increase the number of Hong Kong-based banks that handle the e-CNY
• Expand service and use-case scenarios for Hong Kong-based firms and individuals
• “Explore” new digital yuan-powered cross-border remittance services for micropayments
• Expand the number of merchants handling the digital yuan in Hong Kong.
• Develop digital yuan services that are “more in line with the habits of Hong Kong residents”

The Deputy Governor also added that the PBoC and the HKMA would work to “promote the interoperability of digital yuan and Hong Kong payment systems.”

The PBoC further indicated that it would look to make more e-CNY progress “in key scenarios such as cross-border e-commerce and education.”

Shanghai court has issued a verdict in the first instance of money laundering involving Chinese digital yuan and cryptocurrency.

The Yangpu District People’s Court in Shanghai concluded the case, setting a significant legal precedent for crypto-related crimes in China.

— Cryptonews.com (@cryptonews) January 18, 2024

The PBoC’s Digital Currency Research Institute launched its first digital yuan cross-border payment pilot project at the end of 2020.

Since then, the bank has stepped up the pilot’s progress by launching a connection to Hong Kong’s Fast Payment System network.

Major Mainland players like JD.com and the commercial Bank of China have also joined cross-border digital yuan projects.

Some major Hong Kong-based banks, such as HSBC, have also begun offering clients digital yuan services.