Authorities in Hong Kong are reportedly considering collaborating with mainland China on digital currency, in a move which could see the digital yuan become widely accepted across Hong Kong.
Hong Kong Treasury Secretary Christopher Hui said that the government in Hong Kong was actively exploring working with Chinese authorities to incorporate the digital yuan in wholesale and cross-border settlement settings across the region.
In particular, Hui said a collaboration would increase connectivity between Hong Kong and mainland China, bolstering economic and financial ties between the territories.
“If the [digital yuan] can be applied to cross-boundary payments, it would further promote the mutual connectivity.”
The Hong Kong Monetary Authority will continue to discuss incorporating the digital yuan with representatives from the People’s Bank of China over the coming weeks and months, with Hong Kong keen to explore how the digital currency could bring further economic benefits to the region.
“In addition, the Financial Services Development Council has formed a working group to study how Hong Kong can seize the opportunities from DC/EP’s development.”
Responding to reports that China was planning a trial of the digital currency in Hong Kong, Hui dismissed the suggestion outright. Instead, he maintained that authorities in Hong Kong were prepared to “actively respond and collaborate” with the Chinese government if there is interest.
The move comes as China continues to progress plans for its central bank digital currency, in common with central banks worldwide. Reports earlier this week detailed a recent trial in retail outlets across Shenzhen, which saw 8.8 million yuan transacted in digital currency over the period.
With Hong Kong keen on exploring opportunities with the digital currency further, the developments could further advance progress towards a full-scale roll-out of China’s digital yuan over the coming months.
To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.
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