Hong Kong to Expand Pilot Scope of China’s Digital Yuan for Cross-Border Payments
Hong Kong plans to expand the pilot scope of e-CNY, China’s central bank digital currency (CBDC) in trial, to enhance cross-border payment efficiency, according to the government’s latest budget. The financial secretary of Hong Kong, Paul Chan, announced in his budget speech that the government intends to expand the pilot testing of the digital yuan so that more residents in Hong Kong can top up their e-CNY wallets through the local existing “Faster Payment System” (FPS). FPS is a real-time payment settlement system that allows users to make cross-bank e-wallet payments by entering the mobile phone number or email address of the recipient.
A Multi-CBDC Platform
The Hong Kong Monetary Authority (HKMA) has also been involved in the mBridge CBDC project, which is set to launch its first phase of service this year. The mBridge project is a collaboration between the Bank for International Settlements, HKMA, and the central banks of China, Thailand, and the UAE. It aims to experiment with a common multi-CBDC platform for wholesale cross-border payments.
In addition to these initiatives, Hong Kong recently issued its second batch of tokenized green bonds. The issuance attracted overwhelming subscription from global institutional investors and was described as the world’s first-ever multi-currency tokenized bond issuance. Asset managers, insurance companies, private banks, and non-financial corporates all participated in this successful offering.
Furthermore, Hong Kong is planning to introduce a sandbox for those interested in issuing stablecoins. In December, the Financial Services and Treasury Bureau and HKMA launched a consultation on regulating stablecoin issuers. The proposed regulations state that all fiat-referenced stablecoin issuers should obtain a license from the HKMA.
Hot Take: Hong Kong Expands Pilot Scope of China’s Digital Yuan for Cross-Border Payments
Hong Kong’s decision to expand the pilot scope of China’s central bank digital currency (CBDC) demonstrates its commitment to enhancing cross-border payment efficiency. By allowing more residents in Hong Kong to top up their e-CNY wallets through the local Faster Payment System, the government aims to facilitate seamless and convenient transactions.
The involvement of the Hong Kong Monetary Authority in the mBridge CBDC project further highlights the city’s dedication to innovation in the financial sector. This collaborative effort with other central banks aims to create a common platform for wholesale cross-border payments, streamlining international transactions.
The successful issuance of tokenized green bonds in Hong Kong showcases the city’s position as a global financial hub. The overwhelming response from institutional investors reflects confidence in Hong Kong’s financial market and its commitment to sustainable investing.
Lastly, the introduction of a sandbox for stablecoin issuers underscores Hong Kong’s proactive approach to regulating emerging technologies. By establishing clear guidelines and licensing requirements, the government aims to ensure stability and consumer protection in the growing stablecoin market.
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