Hong Kong Debuts China’s Digital Yuan Pilot, Prohibits Peer-to-Peer Transfers
China’s central bank digital currency is now available in Hong Kong, as Beijing is pushing hard to digitize its economy.
Digital Yuan Launches in Hong Kong
China has taken a significant step by introducing its digital yuan, also known as e-CNY, in Hong Kong. This marks the first pilot program of the digital currency outside mainland China. According to a press release from the Hong Kong Monetary Authority (HKMA), residents can now use e-CNY for cross-boundary payments in local shops.
Limited Usage and Banking Integration
During the pilot phase, the use of e-CNY is restricted to Hong Kong residents. They can top up their digital wallets with up to 10,000 CNY (approximately $1,385) through 17 retail banks in Hong Kong, including Standard Chartered Bank, ZA Bank, and DBS Bank. The e-CNY application is available for download on both Google Play and Apple’s App Store.
Restrictions on Transfers
According to the HKMA’s user guide, the e-CNY wallets are designated for cross-boundary payments only. Peer-to-peer transfers are not permitted during this pilot phase. This restriction aims to focus the pilot on commercial transactions and test its effectiveness in a controlled manner.
Collaborative Efforts for Expansion
Eddie Yue, head of HKMA, emphasized Hong Kong’s commitment to working closely with the People’s Bank of China, the country’s central bank. The goal is to gradually expand the applications of e-CNY, enhance the functionalities of the e-CNY wallet for Hong Kong residents, and promote its acceptance among more retail merchants in both regions.
U.S. Response to China’s Digital Currency
While Hong Kong is advancing with the digital yuan, U.S. policymakers are taking a different stance. In early November 2023, Senator Rick Scott introduced the Chinese CBDC Prohibition Act. This legislation aims to prevent U.S. financial service operators from interacting with China’s digital currency. The proposed ban targets U.S. post offices, remittance firms, peer-to-peer crowdfunding platforms, and all money services businesses, prohibiting them from facilitating any transactions involving the digital yuan.
