Hong Kong pilots first-ever digital yuan payment system for cross-border transactions News ▸ China · Hong Kong ▸ Technology
Hong Kong pilots first-ever digital yuan payment system for cross-border transactions
The Digital Yuan pilot scheme does not support peer-to-peer transactions.
1 min read
Updated: May. 17, 2024 at 1:45 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
The People’s Bank of China (PBoC) and the Hong Kong Monetary Authority (HKMA) have taken significant steps to expand the Digital Yuan (e-CNY)’s reach beyond mainland China.
On May 17, the HKMA announced a pilot scheme enabling the use of the Central Bank Digital Currency (CBDC) for cross-boundary payments.
According to the authorities, this e-CNY scheme will provide safer, more convenient, and innovative cross-border retail payments between Hong Kong and Mainland residents.
Cross-border transactions
This initiative also allows Hong Kong residents to set up personal e-CNY wallets with their mobile numbers, but they cannot perform peer-to-peer transactions among themselves.
Under this scheme, Hong Kong residents can fund their digital yuan wallets through 17 retail banks via the Faster Payment System (FPS). The statement added:
“The interoperability between the FPS and the e-CNY system operated by the Digital Currency Institute (DCI) of the PBoC also marks the first linkage of a faster payment system with a central bank digital currency system in the world.”
Eddie Yue, Chief Executive of the HKMA, stated that the e-CNY application and wallet would gradually gain more functionality as more retail merchants adopt the system. He said:
“By expanding the e-CNY pilot in Hong Kong and leveraging the 24×7 operating hours and real-time transfer advantages of the FPS, users may now top up their e-CNY wallets anytime, anywhere without having to open a Mainland bank account, thereby facilitating merchant payments in the Mainland by Hong Kong residents.”
Moreover, HKMA said it plans to upgrade the e-CNY wallets to higher tiers through real-name verification and will support corporate use cases for cross-border trade settlements in the future.
This initiative continues China’s efforts to popularize its CBDC program. The country already uses the currency to pay some of its workers monthly salaries.
Author 
Oluwapelumi Adejumo
Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
