Hong Kong-based firms have made significant progress in the adoption of the Mainland Chinese digital yuan, also known as the Central Bank Digital Currency (CBDC). In an exciting development, these firms have successfully conducted the first “cross-border” commodity payments using the digital yuan. The Bank of China (Hong Kong) recently launched the “Enterprise Digital RMB Cross-border Transaction Pilot,” which involved collaboration with its parent company, the Mainland-based Bank of China.
Expanding the Possibilities
Previously, Hong Kong-Mainland pilots mainly focused on retail use cases for the digital yuan in sectors like duty-free shopping and public transport. However, the recent pilot by the Bank of China marks a significant breakthrough in the business-to-business (B2B) field. Several Hong Kong and Mainland firms have successfully processed a total of $3.4 million worth of payments using this innovative solution.
“The digital yuan has shown immense potential in transforming cross-border transactions. In this pilot program, an importer paid for a shipment of iron ore entirely in e-CNY, marking a milestone in the adoption of digital currencies for trade.”
Bank of China (Hong Kong)
The Bank of China (Hong Kong) has taken the necessary steps to support local enterprises that wish to utilize the digital yuan for trading with Mainland firms. It now provides fundamental capabilities such as digital yuan wallet opening, transfer, and redemption services. These services not only help reduce cross-border settlement costs for enterprises but also improve transaction efficiency.
Expanding the Horizon
The success of the pilot program has paved the way for further expansion and enhancement of CBDC services. The Bank of China (Hong Kong) plans to broaden its range of services to support more corporate customers interested in leveraging the digital yuan for cross-border settlements.
In a related development, government officials in Hong Kong revealed that more local banks are set to participate in the e-CNY pilot program. Leading institutions like HSBC, Hang Seng, and Standard Chartered have already joined the pilot, highlighting Beijing’s ambition to encompass more financial institutions in the digital yuan ecosystem.
