Digital yuan to spread its wings
Eight years after China began creating its central bank digital currency, the Hong Kong Special Administrative Region is poised to become a global crypto hub with further policies and infrastructures rolled out. The digital yuan might be the most active currency in the SAR to settle international trade.
The digital yuan, or e-CNY, is fiat currency in a virtual form issued by the central bank, the People's Bank of China. As a forerunner in the global race in testing digital currency, e-CNY research in China started in 2014. A pilot program kicked off in 2019 with brick-and-mortar consumption, the receipt of pension subsidies and expenditure on campuses. In October, the business took a big leap forward with 23 Chinese mainland cities adopting the digital yuan, covering nearly one-fifth of the mainland's population. The value of transactions soared to about 100 billion yuan ($13.9 billion), taking the lion's share of the world's e-currency transactions.
The digital yuan isn't confined to the domestic market - it's all about going global. A white paper released by the PBOC last year tracked the nation's progress in the research and development of e-CNY, saying it will "explore (the digital yuan) in improving cross-border payments".
The PBOC took part in the world's largest cross-border multicountry payment trial mBridge project over a period of six weeks this year. The Hongkong and Shanghai Banking Corporation Ltd is one of the participants using e-CNY in the project in Hong Kong. Lewis Sun Lei, global head of domestic and emerging payments, global payments solutions, at HSBC, said the mBridge project "shows that CBDCs are a viable means to provide real-time cross-border payments and foreign exchange transactions that are low in cost, high in speed, less complex and more transparent".
Guangdong-based TCL Technology, one of HSBC's clients, said in a statement that "Using mBridge to proceed transactions can help to eliminate additional charges by a correspondent bank, and with a faster payment processing."
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