The Hong Kong Monetary Authority (HKMA) announced on Friday that residents in Hong Kong can now set up personal e-CNY wallets, marking a significant step in expanding the use of China's central bank digital currency (CBDC) among local users.

In collaboration with the People’s Bank of China, the HKMA has simplified the process for Hong Kong residents to create personal e-CNY wallets. Users only need their Hong Kong mobile phone numbers to get started. This initiative is designed to facilitate seamless cross-border payments, enhancing financial connectivity between Hong Kong and Mainland China.

The e-CNY wallets will integrate with Hong Kong’s Faster Payment System (FPS), enabling users to top up their wallets via 17 retail banks in the city. However, the primary focus of these wallets is to support cross-border transactions between Hong Kong and the Mainland. Person-to-person transfers within Hong Kong are not currently available.

“Users may now top up their e-CNY wallets anytime, anywhere without having to open a Mainland bank account, thereby facilitating merchant payments in the Mainland by Hong Kong residents,” said HKMA Chief Executive Eddie Yue in the press release.

This development is part of the broader "three connection, three facilitation" initiative announced by the HKMA in January, aiming to strengthen financial ties between Hong Kong and Mainland China.

China has been vigorously promoting its pilot CBDC program, with initiatives such as paying monthly salaries in e-CNY to government workers and employees of state-owned enterprises. Despite these efforts, the South China Morning Post reported that many recipients of digital yuan salaries are hesitant to use the CBDC directly due to privacy concerns and other limitations.

Meanwhile, Hong Kong is advancing its own CBDC efforts with the second-phase pilot program of the e-HKD. The region also launched a regulatory sandbox for stablecoins in March, fostering dialogue between regulators and issuers interested in launching fiat-pegged stablecoins in Hong Kong.

The introduction of personal e-CNY wallets in Hong Kong represents a crucial step in enhancing cross-border financial integration and showcases the growing adoption of digital currencies in the region.