The second phase of the ongoing CBDC trails between the Mainland and Hong Kong will involve connecting e-CNY wallets to Hong Kong’s FPS.
The PBOC’s (People’s Bank of China) Digital Currency Research Institute is reportedly planning to connect China’s CBDC, or e-CNY, to Hong Kong’s FPS (Faster Payments System) as part of ongoing digital currency trials.
In the first phase of trials between the Mainland and Hong Kong, the PBOC and HKMA (Hong Kong Monetary Authority) enabled Chinese travellers to recharge, transfer and spend money using their digital e-CNY wallets in Hong Kong. The initial trials included select Hong Kong banks and a limited set of Hong Kong merchants.
Hong Kong visitors to China were also able to use the e-CNY for payments in the Luohu District of Shenzhen.
According to reports, the trials have now moved into a second phase – which includes connecting e-CNY wallets to Hong Kong’s FPS, to further improve payment efficiency based on usage habits of local Hong Kong residents.
“In the future, when Mainland tourists use digital RMB to shop in Hong Kong, currency exchange will be completed between two wallets, and local merchants will receive money in Hong Kong dollars, so there will be no currency substitution,” said Mu Changchun, the head of the PBOC’s Digital Currency Research Institute.
“When the epidemic is over, and people can freely travel between the Mainland and Hong Kong, the digital RMB wallet will greatly enhance the facilitation level of cross-border payments between the two places.”
Mu also discussed work underway to establish a multilateral cooperation mechanism under the mBridge project, which involves cooperation between the PBOC, HKMA, BOT (Bank of Thailand), and the CBUAE (Central Bank of the UAE).
The project is exploring the use of DLT to realise round-the-clock synchronous settlement of cross-border foreign exchange transactions involving CBDC.
He said the mBridge test platform has already been constructed, and that technical testing has sp far shown efficiency, cost and transparency improvements in cross-border payments for international trade.
“In the future, the currency bridge project will combine new business use cases to expand a wider range of application scenarios; improve the usability, compatibility and diversity of the currency bridge; and explore flexible integration with more systems to achieve a win-win situation for all parties,” Mu said.
“Hong Kong as international financial centre can give full play to its own advantages, expand the currency bridge’s ‘circle of friends’, and share and build a cooperative network.”
Meanwhile, the PBOC has already completed work to integrate the CBDC in payments at all venues for the 2022 Olympic and Paralympic Winter Games in Beijing.
Consumers at the Games will be able to open e-CNY wallets at Bank of China branches, self-service machines, and some hotels. Besides mobile wallets, they will also be able to use the e-CNY via physical wallets, in the form of cards as well as wearables such as smart watches, ski gloves and badges.
Consumers will be able to use the e-CNY for various services, including transportation, catering, accommodation, shopping, sightseeing, healthcare, telecommunications, and entertainment.
As of 22 October, following pilot trials launched in 10 Chinese cities, a total of 140 million personal e-CNY wallets had been opened.