The Hong Kong Monetary Authority said it is discussing the technical pilot testing of the digital yuan, or e-CNY, for cross-border payments with the Digital Currency Institute of the People’s Bank of China, the central bank.
Eddie Yue Wai-man, chief executive of the HKMA, said the monetary authority and the PBOC have been making corresponding technical preparations, but there is not yet a timetable for the launch.
As the largest offshore yuan center, Hong Kong has a pool of more than 670 billion yuan ($99.8 billion) although most of it is illiquid.
Renminbi is already in use in Hong Kong, and the status of e-CNY is the same as cash in circulation, said Yue. The digital currency will be an additional payment option for those who need to make cross-border purchases.
Carlos Casanova, senior economist for Asia at Union Bancaire Privee based in Hong Kong, said that digital renminbi used in cross-border payments can promote the internationalization of the yuan, and promote the country’s trading strengths.
The digital renminbi can improve the convenience of cross-border payments and reduce reliance on the US dollar and SWIFT, Casanova said.
At a forum last month, Hong Kong’s Financial Secretary Paul Chan Mo-po said if digital renminbi can be used for cross-border payments, it will further promote the interconnection between Hong Kong and the Chinese mainland, especially with the rest of the Guangdong-Hong Kong-Macao Greater Bay Area.
Chan said the Hong Kong Special Administrative Region government and the HKMA are ready to actively explore various feasible plans with the PBOC to improve and expand the two-way circulation of cross-border renminbi.