The first phase of testing the use of the Chinese Central Bank’s (CBDC) digital currency – digital yuan across borders – was successful, the Hong Kong Monetary Authority said.
People’s Bank of China’s Digital Currency Institute and the Hong Kong Monetary Authority are rapidly advancing their joint tests on the use of the digital yuan for cross-border payments.
according to This week, HKMA staff confirmed to Bloomberg that the first phase of testing for cross-border use of the currency was successful. The initial tests involved multiple parties, including selected traders and a bank designated by the Chinese authorities in the mainland. HKMA said plans for the next phase of pilots are already underway:“We tested the use of the associated app, system connectivity and certain use cases such as cross-border purchases. We discuss and work together with the PBOC [People’s Bank of China] on the next phase of technical testing, including the feasibility of expanding and deepening the use of E-CNY for cross-border payments. “
China’s continued development of the digital yuan – a central bank digital currency sometimes referred to as DC / EP or e-CNY – has set an ambitious pace for global research and possible issuance of CBDCs worldwide.
The country is the largest economy in the world, so far ahead in the development and testing of the CBDC. It has completed numerous advanced pilots in the mainland and announced further plans to encourage the introduction of the currency during the Beijing 2022 Winter Olympics.
Michael Ho, Principal of Financial Services at Oliver Wyman and the co-author of a recently published report With regard to the digital yuan, it has been argued that the importance of China’s new currency lies less in the mere fact of increasing digitization and more in perspective “Introducing a large-scale instant payment infrastructure sponsored by the Chinese government rather than the private sector.”
With the potential for acquisition by some of the world’s largest corporations as well as an increasingly globally connected local population, Ho and his co-author have Jason Eckberg predict that: “If there is an expansion of eCNY to cross-border transactions, supported by the liberalization policy, it will further accelerate the RMB as a true global trade flow and bring both savings and efficiency to the cross-border flows.”