Hong Kong Actively Testing China’s Digital Yuan
Hong Kong is currently engaged in active testing of China’s digital yuan, the country’s central bank digital currency (CBDC). The region has already entered the second phase of technical testing, focusing on incorporating a local payment system. According to Christopher Hui, Secretary for Hong Kong’s Financial Services and the Treasury, the Hong Kong Monetary Authority (HKMA) and the People’s Bank of China have completed initial technical tests for cross-border payments using the digital yuan in Hong Kong.
During the second phase of the trial, more Hong Kong banks are involved, with a specific focus on testing the top-up function of the digital yuan wallet through the Faster Payment System (FPS). The FPS is a payment infrastructure introduced by the HKMA in 2018, allowing for convenient cross-bank payments in Hong Kong dollars or Chinese yuan.
The integration of the digital yuan in Hong Kong is expected to enhance cross-border payment services and user experience, promoting connectivity in the Greater Bay Area of Guangdong, Hong Kong, and Macau.
The Potential Boost of E-CNY for Industry Synergy
Eric Jing, Chairman and CEO of Ant Group, a fintech affiliate of Alibaba, emphasized the potential of the digital yuan for the industrial internet sector. Jing compared the impact of the digital yuan to that of mobile payments on the consumer internet. The digital yuan’s programmability enables cross-chain communication and automatic delivery, leading to significant synergies within the industry.
Hot Take
The active testing of China’s digital yuan in Hong Kong showcases the region’s commitment to exploring the potential of cryptocurrencies and digital currencies. With the incorporation of the digital yuan into the local payment system, Hong Kong aims to enhance cross-border payment efficiency and provide residents with a secure and convenient option for retail consumption. The programmability of the digital yuan opens up new possibilities for industry synergy, paving the way for innovative advancements in the financial sector.
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