Caixin
Dec 05, 2020 04:45 PM

Hong Kong Prepares to Test Digital Yuan

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What’s new: China’s central bank and the Hong Kong Monetary Authority (HKMA) are preparing to test the use of digital yuan for cross-border payments.

HKMA Chief Executive Eddie Yue said Friday that the organizations were preparing for “technical pilot testing,” before adding there was no timeline for the general launch of the digital currency.

The central bank has chosen Bank of China (Hong Kong) Ltd., the local subsidiary of Bank of China Ltd., for the pilot, an HKMA representative told Caixin. The parent, China’s fourth-largest bank by assets, is among the financial institutions involved in developing the digital yuan on the mainland.

The background: The People’s Bank of China, the nation’s central bank, began exploring the use of the digital yuan in 2014, and it is one of the world’s first major central banks to test out a digital currency.

Several cities and regions across China — including the South Chinese megacity of Shenzhen, and the Beijing-adjacent policy testing zone known as Xiongan New Area — launched pilot programs for the digital yuan earlier this year.

The digital yuan will bring greater convenience to Chinese mainland and Hong Kong tourists by offering additional options to those making cross-border purchases, Yue said.

Contact reporter Tang Ziyi (ziyitang@caixin.com) and editor Flynn Murphy (flynnmurphy@caixin.com)

Related: In Depth: China's Digital Currency Ambitions Lead the World

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