Mainland, HK conduct technical tests on cross-border use of digital yuan

China’s central bank and the Hong Kong Monetary Authority (HKMA) have cooperated to conduct technical tests on the cross-border use of the digital yuan, an official said on Thursday, a further step in China’s wider push of the use of the digital currency.

The trial was a normal test for the digital yuan and more will be conducted in the future, Wang Xin, director of Research Bureau of the People’s Bank of China (PBC) said at a press conference in Beijing on Thursday.

Wang said that at present the digital yuan is basically used for domestic retail payments and several rounds of trials have been conducted in the country’s different cities. “PBC is also considering applying the digital yuan in cross-border payment when the conditions are ripe, to meet market demands,” said Wang.

HKMA told Global Times that the trial is focused on the use of related apps, network connection and application scenarios. Nearly 200 bank employees and business owners have joined the trial. HKMA said that they are discussing with the PBC about the next phase of digital yuan trial in Hong Kong to deepen its usage in cross-border payment.

“This digital yuan trial between Shenzhen and Hong Kong is helpful for the free flow of capital and the optimization of financial resources allocation in Guangdong-Hong Kong-Macao Greater Bay Area. It will also create a communication platform for the development of Hong Kong and Chinese mainland,” Wang Peng, assistant professor of the Gaoli Academy of Renmin University of China, told the Global Times.

Wang Peng said that the use of the digital yuan in cross border payments can boost the efficiency of international trade business and also enhance financial security. He believes that more functions of the digital currency, for instance, as a tool for macro-control of financial markets is likely to be tested in digital yuan trials in future.

“The use of digital yuan in Hong Kong and Shenzhen will not only benefit the local financial markets, but it is also a great step of China’s digital currency to be used in international markets,” said Wang Peng.

Meanwhile, a new round of trial of digital yuan among Hong Kong residents was also conducted recently in Shenzhen of South China’s Guangdong Province, according to Shenzhen Special Zone Daily on Thursday.

The trial, which started on Tuesday, is mainly for Hong Kong residents in Shenzhen. Hong Kong residents can register a digital yuan wallet by using their Hong Kong mobile phone number. The daily consume limit can be adjusted to 50,000 yuan ($7,606) after connecting debit card of Bank of China with digital yuan wallet, according to the report.

Wang Xin, the PBC official, also mentioned that PBC is cooperating with HKMA, Central Bank of Thailand (BOT) and Central Bank of the United Arab Emirates to launch a multilateral research program on applying digital yuan in cross border payment.

Source: Global Times