In an important step towards promoting the use of digital currency, Hong Kong residents can now create personal digital wallets for the yuan or CNY, as well as Announce By the Hong Kong Monetary Authority (HKMA).
This development, part of cooperation with the People's Bank of China (PBoC), marks a milestone in the “facilitation” of cross-border transactions between Hong Kong and mainland China.
The introduction of these wallets is expected to expand the use of China's digital yuan, or e-CNY, supporting more regulated and direct payments without the need for a mainland bank account.
Expanding the use of the digital yuan
The Hong Kong Monetary Authority revealed that this initiative aims to expand the use of digital currency among residents and “enhance the interoperability” of cross-border financial systems. Residents can easily set up their e-CNY wallets using their Hong Kong mobile phone numbers.
Furthermore, the supported infrastructure, especially the Faster Payment System (FPS), allows users to top up their e-CNY wallets using 17 retail banks in Hong Kong. However, the system was initially set up to prioritize business payments on the mainland over person-to-person transfers within Hong Kong.
Notably, as revealed in the report, this expansion is part of the “Three Connections, Three Facilities” initiative announced by the People’s Bank of China earlier in the year.
With these developments, the Hong Kong Monetary Authority noted that it is working to “expand the applications of the CNY e-currency and enrich the range of CNY e-wallet functions available to Hong Kong residents.”
HKMA plans for an electronic Chinese yuan
Eddie Yeo, Chief Executive of the Hong Kong Monetary Authority, stressed the strategic importance of this pilot. He noted that Hong Kong is a “pioneer” in facilitating the use of the digital yuan across borders, and “enhancing payment efficiency for Hong Kong residents” on the mainland.
Yue also revealed that the cooperation aims to gradually increase e-CNY applications and “enrich the functions” available to residents. In addition, there are plans to enhance acceptance of the e-CNY by more retailers in both regions, improving the overall user experience.
Efforts extend beyond personal use; Corporate use cases to facilitate cross-border trade settlements are also being explored. The goal is to take the e-CNY wallet to greater heights through “real name verification” and enhancing payment interoperability.
This is said to provide a more convenient experience for individuals and merchants and enhance connectivity between the Guangdong, Hong Kong and Macau Greater Bay Area (GBA). The report noted:
The Hong Kong Monetary Authority will continue to work with DCI to explore upgrading the e-CNY Wallet to greater levels through real name verification and enhancing interoperability in payments to provide more convenient user experiences, both for individuals and merchants.
Featured image from VCG via Getty Images, chart from TradingView
