China, Hong Kong Enter Second Phase of Cross-Border Digital Yuan Trials: Report

Hong Kong banks and merchants have been testing the use of China’s CBDC.

AccessTimeIconDec 9, 2021 at 8:49 a.m. UTC
Updated Dec 9, 2021 at 3:23 p.m. UTC

Eliza Gkritsi is CoinDesk's crypto mining reporter based in Asia.

China and Hong Kong are in the second phase of testing cross-border transactions using central bank digital currencies (CBDCs), Mu Changchun, director of the Digital Currency Institute of the People’s Bank of China, said Thursday, according to Shanghai Securities News.

  • The two have successfully carried out the first phase of technical testing of topping up, transferring and paying through digital yuan wallets in collaboration with Hong Kong banks and merchants, Changchun said at the Hong Kong International Financial Center Status and Prospects Seminar.
  • In the second phase, they will try to link the digital currency system and the Faster Payment System (FPS), an interbank digital payment system in Hong Kong.
  • “In the future, when [China] mainland tourists use the digital yuan to shop in Hong Kong, the foreign currency exchange will be completed between two wallets, and local merchants will receive money in Hong Kong dollars, so there will be no currency substitution,” Changchun said.
  • Changchun also mentioned mBridge, a multilateral project overseen by the Bank of International Settlements to bridge CBDCs between China, Hong Kong, Thailand and the United Arab Emirates.
  • Hong Kong, as an international finance center, can help expand mBridge’s participant countries, he said.
  • The digital yuan is likely to be the first CBDC rolled out by a major global power. Domestic pilot programs have been well under way for over a year, but are mostly focused on small retail transactions.

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

CoinDesk - Unknown

Eliza Gkritsi is CoinDesk's crypto mining reporter based in Asia.

CoinDesk - Unknown

Eliza Gkritsi is CoinDesk's crypto mining reporter based in Asia.