Expand cross-border tests of Digital yuan
Hong Kong in discussion with china regarding the expansion of cross border testing of the digital yuan. The first phase of the testing was successful. The Hong Kong Monetary Authority has tested the use of the app, system connectivity and some other use cases like crossboundary purchases. They are discussing and collaborating with PBOC regarding the next phase of the technical testing that includes evaluating how feasible the use of e-CNY is for cross-boundary payments.
The authority recently conducted s series of tests with the DIGITAL CURRENCY OF THE PEOPLES BANK OF CHINA. This included members designated by the mainland authority, merchants and bank staff. All this information was conveyed by the HKMA as an email response to asked questions.
Quicktake on how china is closing in its own digital currency
PBOC has developed its own digital currency, which is superior and ahead of all the other major central banks. The main aim of this is to replace cash and take over control of the payments landscape which is been dominated by technology companies over years that are not regulated by the banks. The Digital yuan is used as a cross border and china is planning to expand trials in major cities like Shenzen for the winter Olympics next year. This would be an important step for a change. Hence all will be focused on the global adoption of digital currency for financial transactions.
The main advantage of the digital yuan is that it can lead to a faster and cheaper cross border payment. The costs related to cross border payments are about $20 billions to $40 billion per year. This is equal to the city’s gross domestic product percentage. One of the consultancies mentioned in the report that It would be beneficial if China could promote the digital yuan all overseas starting from the greater bay area including hong kong, Shenzhen and Macau. They can use digital yuan to settle oil contracts, and make it an influence as an oil buyer among the countries that are involved in the belt and road initiative.
CBW - External Analyst