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Cross-Border Digital Yuan Pilot Expanded to Hong Kong Residents

By enabling seamless cross-border payments and fostering greater financial integration, the HKMA and PBOC are paving the way for a more connected and efficient financial future.

By enabling seamless cross-border payments and fostering greater financial integration, the HKMA and PBOC are paving the way for a more connected and efficient financial future.
Credit: Foretoken Media 2024

VICTORIA CITY – The Hong Kong Monetary Authority (HKMA) and the People's Bank of China (PBOC) have announced an expansion of their cross-border digital yuan pilot, allowing Hong Kong residents to use e-CNY wallets. This development marks a significant step forward in the integration of digital currency across borders, enhancing financial connectivity between Hong Kong and mainland China.


Expansion of Digital Yuan Pilot


The digital yuan, or e-CNY, is China's central bank digital currency (CBDC), and it has been in development for several years. As one of the most advanced CBDCs globally, the digital yuan aims to modernize the financial ecosystem and facilitate seamless digital transactions.


The new phase of the pilot program enables Hong Kong residents to set up e-CNY wallets using just their phone numbers. These wallets can be used for cross-boundary payments to retailers, although person-to-person transfers are not yet supported, according to a press release from the HKMA on Friday.


Enhanced Payment Capabilities


Residents can use their e-CNY wallets in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) and other parts of mainland China where the pilot is active. This initiative allows users to pay merchants directly without the need to establish a mainland bank account.


HKMA CEO Eddie Yue highlighted that users could top up their wallets in real-time through 17 Hong Kong retail banks using the Faster Payment System (FPS), streamlining the process and ensuring ease of use.


The HKMA is committed to collaborating with the PBOC to further expand the applications of the e-CNY. Future plans include working with the Digital Currency Institute to explore features like name verification, enhancing interoperability in payments, and developing corporate use cases such as cross-border trade settlement. The collaboration aims to ensure that the digital yuan pilot continues to evolve and meet the needs of both individual and corporate users.


Successful Trials and Future Prospects


China and Hong Kong completed the first phase of cross-border digital yuan trials in December 2021, following initial discussions a year earlier. The success of these trials has paved the way for the second phase, which promises to further integrate and expand the use of the digital yuan.


In parallel, Hong Kong has been testing its own CBDC, the e-HKD, which entered the second phase of its pilot in March. These initiatives reflect the region's commitment to advancing digital currency technology and maintaining its position at the forefront of financial innovation.

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