China’s Digital Yuan Enters Phase Two of Cross-Border Trials

Written By Francisko Kim

Key Points:

  • China’s central bank digital currency (CBDC), eCNY Digital Yuan, has been testing in major cities/provinces since April 2020

    • Most of the testing so far has been focused on retail transactions. Back in October, there were reports of China pressuring major companies to expand their eCNY trial program.

  • China is now further testing cross-border transactions with Hong Kong

    • The first phase of cross-border testing was successful and included testing of depositing, transferring, and paying through eCNY wallets in collaboration with Hong Kong banks

    • One major application will be for automatic and instant currency exchange, e.g. A Chinese tourist would simply use the digital yuan wallet to shop while in Hong Kong and local merchants would directly receive Hong Kong dollars

  • Tourists going to China will also be able to download an eCNY wallet to access the eCNY payment infrastructure

Francisko Kim
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