The People’s Bank of China (PBoC) and the Hong Kong Monetary Authority (HKMA) have taken significant strides in extending the reach of the Digital Yuan (e-CNY) beyond mainland China.

On May 17, the HKMA unveiled a pilot program allowing the use of the Central Bank Digital Currency (CBDC) for cross-border payments. This e-CNY initiative aims to enhance the safety, convenience, and innovation of retail payments across borders between Hong Kong and mainland residents.

Hong Kong residents are now able to create personal e-CNY wallets linked to their mobile numbers, although they cannot conduct peer-to-peer transactions among themselves. They can fund these wallets through 17 retail banks using the Faster Payment System (FPS). The HKMA noted:

“The interoperability between the FPS and the e-CNY system operated by the Digital Currency Institute (DCI) of the PBoC also marks the first linkage of a faster payment system with a central bank digital currency system in the world.”

Eddie Yue, Chief Executive of the HKMA, emphasized that the functionality of the e-CNY application and wallets will progressively expand as more retail merchants adopt the system. He explained:

“Expanding the e-CNY pilot in Hong Kong and leveraging the 24x7 operating hours and real-time transfer advantages of the FPS, users can now top up their e-CNY wallets anytime, anywhere without the need for a Mainland bank account, facilitating merchant payments in the Mainland by Hong Kong residents.”

Additionally, the HKMA plans to enhance e-CNY wallets through real-name verification and intends to support corporate use cases for cross-border trade settlements in the future.

This initiative reflects China’s ongoing efforts to promote its CBDC program, which already includes using the digital yuan for paying monthly salaries to some workers in the country.