Hong Kong working with China, Thailand central banks to promote digital currencies, cross-border trade

Hong Kong Monetary Authority (HKMA) said it has been working with China’s central bank and other regional monetary authorities on how to use digital currencies and trade platforms for fostering cross-border payments in the “Greater Bay Area” development zone and Southeast Asia.

HKMA, Hong Kong’s de facto central bank, was closely monitoring the roll-out of the digital renminbi developed by the People’s Bank of China (PBOC), and would like to see the Digital Currency Electronic Payment platform used in the city, Edmond Lau, its senior executive director, said.

“Visitors from mainland China right now can spend renminbi – cash or credit cards – in Hong Kong, so there is no reason why they cannot use the new digital currency here, if the PBOC allows it to be used outside China in the future,” Lau said during the annual Fintech Week, a conference organised by the Hong Kong government.

Such a move would be a step towards reasserting the role of Hong Kong – already the largest offshore trading centre for the Chinese currency since a 2009 drive to push the yuan’s global use – in the internationalisation of the renminbi. A digital format of the Chinese currency, treated as M0, or notes and coins in circulation, will be a step in that direction.

China is still in the early stages of developing the digital yuan, which will be issued and backed by the central bank. It has been used in 4 million transactions valued at 2 billion yuan (US$297.78 million) since a pilot roll-out in Shenzhen, Suzhou, Chengdu and in the Xiong’an new area outside Beijing in Hebei province. A nationwide launch and overseas usage have not been determined yet.

Speaking at the same conference, Yi Gang, the PBOC’s governor, said the Chinese central bank was open to collaborating with other monetary authorities in establishing a legal framework for adopting and promoting the worldwide use of digital fiat currencies.