Hong Kong Ready for Phase 2 Digital RMB Testing: What Does It Mean?

Briefly:

  • The People’s Bank of China and Hong Kong authorities continue to test digital yuan
  • Now they will try to insert the currency into the Faster Payment System
  • As a result, tourists from China will be able to buy goods from Hong Kong for the digital yuan
  • Sellers will receive Hong Kong dollars

On Thursday, December 9, the head of the CBDC Institute of the People’s Bank of China Mu Changchun announced that Hong Kong is ready for the second phase of testing cross-border transfers via digital yuan.

At the first stage, the mechanism of replenishment and payment through a digital wallet was checked. Now the parties will try to integrate the currency into the Faster Payment System.

China first spoke about this initiative at the end of April this year. At that time, some Hong Kong residents had the opportunity to buy money in neighboring Shenzhen through an electronic wallet.

Successful implementation of the system will allow payments through the digital yuan in Hong Kong without currency exchange. When buying and paying for CBDC, funds will be automatically converted to Hong Kong dollars.

In his speech, Changchun also mentioned the mBridge project. This is a multilateral agreement with the participation of the Bank for International Settlements in Switzerland. The project will facilitate financial transactions between parties in China, Hong Kong, UAE and Thailand.

If the second phase of testing the digital yuan is successful, it will significantly expand the capabilities of mBridge. Hong Kong is a global financial center, and the introduction of China’s CBDC into its transactions will add weight to the currency in the international arena.

Read Also: Digital RMB trading volume reached 20 billion dollars.

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