Hong Kong is set to permit the use of mainland China’s experimental digital currency in local shops, as announced by the head of its de facto central bank on Friday. This move signifies a significant advancement in Beijing’s agenda to globalize the yuan, particularly amid escalating geopolitical tensions.
Under the program, endorsed by Beijing, residents from mainland China and Hong Kong can create digital yuan wallets via a mobile app developed by China’s central bank. These wallets will enable users to conduct transactions in retail stores and select online outlets in both Hong Kong and mainland China.
As of June 2023, transactions utilizing the e-CNY, primarily for domestic retail payments within China, amounted to 1.8 trillion yuan ($249.27 billion), with 120 million digital wallets established, according to recent disclosures from China’s central bank. Using these wallets, individuals can make payments at over 10 million merchants across 17 provinces and cities in mainland China.
Each wallet used in Hong Kong will have a balance limit of 10,000 yuan, with individual transactions and daily payments capped at 2,000 yuan and 5,000 yuan, respectively, as confirmed by officials from the Hong Kong Monetary Authority (HKMA). However, peer-to-peer transfers are not currently permitted, according to the HKMA.
Eddie Yue, Chief Executive of the HKMA, emphasized the benefits of expanding the e-CNY pilot in Hong Kong, stating that users can now conveniently top up their wallets without the need to open a mainland bank account. This facilitates merchant payments in mainland China by Hong Kong residents.
Presently, users of other digital yuan wallets, such as those operated by Ant Group and Tencent, can already make payments in Hong Kong.
Industrial and Commercial Bank of China, Bank of China Ltd, China Construction Bank Corp, and Bank of Communications Co have been designated as e-CNY wallet operators.
