Hong Kong is taking a step forward in integrating with China's digital currency ambitions. The head of Hong Kong's de facto central bank announced on Friday that mainland China's pilot digital currency, the e-CNY, can now be used in shops across the city. This move signifies progress for Beijing's efforts to internationalize the yuan, even amidst rising geopolitical tensions.
A Collaborative Effort for Cross-Border Payments
The program, backed by China, allows residents from both mainland China and Hong Kong to open digital yuan wallets through a mobile app developed by China's central bank. These wallets can then be used for transactions in retail stores and some online stores in both Hong Kong and mainland China.
The e-CNY has already seen significant adoption within China, primarily for domestic retail payments. As of June 2023,transactions using the e-CNY reached a staggering 1.8 trillion yuan ($249.27 billion), with over 120 million digital wallets opened, according to China's central bank. Users with these wallets can make payments at over 10 million merchants across 17 provinces and cities within mainland China.
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Limited Use for Now, Future Expansion Likely
Hong Kong's implementation comes with some limitations. Wallets used in the city will have a balance limit of 10,000 yuan, with individual transactions capped at 2,000 yuan and daily spending capped at 5,000 yuan. Additionally, peer-to-peer transfers are not currently allowed.
However, Hong Kong Monetary Authority (HKMA) Chief Eddie Yue remains optimistic. He highlighted that the e-CNY pilot expansion in Hong Kong allows users to "top up their wallets anytime, anywhere without having to open a mainland bank account," simplifying cross-border payments for Hong Kong residents.
More Players in the Digital Yuan Game
It's important to note that residents can already use other digital yuan wallets offered by companies like Ant Group and Tencent within Hong Kong. This move by the HKMA suggests a potential future for broader integration of the e-CNY within the city.
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Source: Reuters
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