Hong Kong to embrace the opportunities of China’s digital yuan CBDC development

Hong Kong plans to collaborate with the mainland Chinese authorities for the its CBDC project, says HK Treasury Secretary Christopher Hui.

By · Oct 22, 2020 . 6min read

Hong Kong China's digital yuan CBDC development news

The Hong Kong government is contemplating associating with the mainland Chinese authorities on the country’s central bank digital currency (CBDC) project. According to Hong Kong Treasury Secretary Christopher Hui, Hong Kong is most involved in wholesale and cross-border digital currency use cases.

If the Digital Currency/Electronic Payment (DC/EP) being developed by the People’s Bank of China (PBoC) can be applied to cross-boundary payment, it would further promote the mutual connectivity between the Mainland (including the Guangdong-Hong Kong-Macao Greater Bay Area) and Hong Kong. The Government and the HKMA will continue to maintain communication and explore the possibility of collaboration with the PBoC.

Christopher Hui says in the official Legislative Council Q&A

Hong Kong an ideal destination for trialling CBDC

China’s digital yuan concentrates on retail transactions and the digital currency electronic payment (DCEP). It was utilized in various tests in some of the country’s major cities. Recently, the city of Shenzhen conducted a $1.5 million giveaway for the promotion of digital yuan. It includes the special administrative region of Hong Kong.

Hong Kong acts as a global offshore business hub. Consequently, it would be an excellent destination for testing digital yuan in the city. The Asian financial hub, Hong Kong, thus examined the uses of a central bank digital currency since 2017. The uses were examined under a project called “Project LionRock.” 

The city already has an efficient retail payment infrastructure, according to the research from the Hong Kong Monetary Authority (HKMA). Therefore the likelihood of a CBDC would direct at the wholesale and cross-border payment level. To promote Project LionRock even further, the HKMA has associated with the Bank of Thailand for a joint study looking into the trials of cross-border trade payments by banks. 

Moreover, recently Hong Kong Monetary Authority (HKMA) selected U.S. blockchain firm ConsenSys for a central bank digital currency (CBDC) project. The initiative includes a cross-border payment network with Thailand as the second implementation phase of Project Inthanon-LionRock. 

However, it seems that the Chinese authorities have earlier handpicked the Greater Bay Area, which Hong Kong is a part of, to test out the Chinese CBDC. Nevertheless, Christopher Hui has disregarded the reports. Yet, he says that HKMA will actively acknowledge and collude with PBoC if they share the same interests.

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