Hong Kong is in talks to pilot-test China’s new digital currency DC/EP

The arrival of the Chinese Digital Yuan (DC/EP) received quite a bit of attention in late 2020 after the results of two large-scale DC/EP payment trials in Tokyo were announced. Chau and Shenzhen. Besides, the news that Hong Kong will work with China’s central bank to further develop the currency for cross-border payments is also causing the community to explode again.

Hong Kong is in talks to pilot-test China’s new digital currency DC/EP

The Hong Kong Monetary Authority (HKMA) is in talks with Digital Currency Institute, a research unit of the People’s Bank of China (PBOC), to pilot test the DCEP, part of the PBOC’s ambitious project to develop a digital currency. While there’s no timetable as yet for the launch of the digital yuan, also called e-CNY, for cross-border payments, tangible progress is expected in 2021. This development is very important for once the digital yuan Entered into Hong Kong for cross-border payments, this will be the first time the new yuan will be used outside mainland China.

Eddie Yue, chief executive officer of HKMA, in early December said:

“The HKMA is in discussion with the Digital Currency Institute on the technical pilot testing of using the digital yuan for making cross-border payments and making the corresponding technical preparations.”

Yue added:

“The e-CNY will bring convenience to Hong Kong and mainland tourists, as the renminbi is already in use in Hong Kong and the status of e-CNY is the same as cash in circulation.”

Although there is no timetable for the official launch of the e-CNY, some sources believe that the DC/EP test will be conducted at the Bank of China of Hong Kong with 200 employees and several merchants. selected in Hong Kong. The DC/EP could play an important role for the Hong Kong government as they seek to revive and revitalize the city after social unrest in 2019 and the COVID-19 pandemic in 2020.

DC/EP, if deployed successfully and quickly, can support the re-establishment of Hong Kong as Asia’s leading financial center and resolve any argument that someday other locations, like Singapore, Bangkok, or even Hainan, can replace SAR.

However, applying DC/EP to cross-border transactions still faces legal challenges. At the same time, the rule of law in one country, two systems in Hong Kong will be tested.

Besides, for Hong Kong’s DC/EP system to be successful, foreigners and international companies must also have full confidence in the digital yuan regarding privacy and any collected data will be Not used against them. But it’s all those uncertainties that make Hong Kong a unique sandbox for testing out DC/EP and cross-border transactions.

Read more:

Follow us on Telegram

Follow us on Twitter

Follow us on Facebook

You might also like