The People’s Bank of China (PBoC) moved a step further in its Central Bank Digital Currency (CBDC) race after it began testing the Digital yuan with the Hong Kong Monetary Authority (HKMA).
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Precisely, both entities are presently in the second phase of the Digital yuan integration technical tests for payments, especially cross-border transactions in Hong Kong, per a report from Global Times.
Digital Yuan Technical Test With More Banks
This current phase is engaging more Hong Kong banks alongside an ability to utilize the Fast Payment System to top up digital yuan wallets. By the end of the first half of this year, Digital yuan transactions were already touching 1.8 trillion yuan, equivalent to approximately $250 billion.
E-payment platform Octopus Cards Limited (OCL) is one of the companies that would be exploring use cases of the CBDC . OCL has a very high rate of customer penetration in Hong Kong. The alliance with PBoC is targeted towards benefiting Hong Kong-mainland visitors and those residents who are visiting the mainland.
Speaking in the Legislative Council, Christopher Hui Ching-yu, the secretary for Financial Services and the Treasury of the HKSAR said, “Subject to regulatory approval and technical readiness, we welcome the OCL to provide an inbound solution facilitating mainland tourists’ use of digital yuan in Hong Kong through topping up Octopus cards in tourist mobile apps.”
Fintech Collaborations to Promote China CBDC
Hui acknowledged the importance of having such cross-border fintech collaborations to push mutual access to e-payments between mainland China and Hong Kong.
The yuan-based CBDC is another way of providing both regions with a secure, convenient, and innovative means of conducting cross-border transactions. Ultimately, it would enhance user experience and the efficiency of cross-border settlements.
Hong Kong Offers Safe Financial Haven
Furthermore, the regulatory system of Hong Kong and the safe haven which it provides for financial exploits, make it one of the choicest regions for financial experts.
Wang Peng, an associate researcher at the Beijing Academy of Social Sciences highlighted Hong Kong’s free economy, mature financial markets, and the refined regulatory system that makes it a “good environment” for the application of Digital yuan.
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