21/10/20

HONG KONG: Jurisdiction open to joining central bank on digital currency trial.

As published on thestandard.com.hk, Wednesday 21 October, 2020.

Hong Kong will explore the possibility of collaborating with the People's Bank of China on the digital currency and electronic payment being developed by the central bank, the Secretary for Financial Services and the Treasury, Christopher Hui, said today.

He said Hong Kong has been paying attention to developments by the central bank.

“We understand that currently, the trial of DC/EP is used for retail payments in the mainland. The PBoC is also conducting trials in selected cities. In the event that the PBoC would like to explore the use of DC/EP in places outside of the mainland, including Hong Kong, the government and the HKMA will respond and collaborate,'' Hui said.

“We will also continue to explore with the industry and mainland authorities on the enhancement and expansion of channels for two-way flow of cross-boundary yuan funds.''

Hui was responding to a question in Legco by lawmaker Chan Chun-ying. Chan said that the People's Bank of China is now taking the lead in the research and development of digital yuan, and announced in April this year the roll-out of related trials in four mainland cities.

Hui said that the Hong Kong Monetary Authority began researching central bank digital currency in 2017 under a project named "Project LionRock.'' Research findings pointed out that as Hong Kong already had efficient retail payment infrastructure and services, the application of CBDC would have greater potential at the wholesale and cross-border payment level.

“In 2019, the HKMA and the Bank of Thailand initiated a joint study named 'Project Inthanon LionRock.' The joint study entered phase two this year, which involved trials of cross-border trade payments by banks and corporates from both sides,'' Hui said.

Earlier this month, the Shenzhen municipal government and the central bank issued digital yuan red packets. People in Shenzhen were asked to join a lucky draw for 50,000 digital currency red packets worth a total 10 million yuan.

Each red packet was worth 200 yuan.-The Standard