China is increasing the scope of applications for its Central Bank Digital Currency (CBDC), the digital yuan, or e-CNY, as part of its Belt and Road initiative and cross-border trading efforts. The digital yuan, also known as the digital RMB, was among the first CBDCs to be developed and extensively tested.
A recent report indicates that a scheme to encourage the use of the Chinese digital currency in cross-border trade has been unveiled in Xuzhou city, which is a significant departure point for numerous goods trains from China en route to Europe.
The city has 18 regular cross-border railway links with 21 nations in Asia and Europe. Despite no official launch, the government has broadened the testing phase to encompass multiple cities and millions of individuals.
The city of Xuzhou, known for its bustling trade, intends to encourage the adoption of e-CNY for payment of services and storage fees for goods transported by cross-border trains. The pilot program aims to expand the use of e-CNY to cover tax and utility payments within the city in the future.
Jiangsu Province, in particular, has actively promoted the application of digital yuan in various scenarios. Meanwhile, Changshu, another city in the province, recently declared its plan to use digital yuan to compensate government employees and individuals who work for public institutions starting next month.
According to the report, an official from the Hong Kong Monetary Authority (HKMA) announced over the weekend that the Guangdong-Hong Kong-Macau Greater Bay Area would also serve as a pilot location for testing cross-border payments using the digital yuan.
Deputy chief executive Darryl Chan stated:
“The HKMA is working with mainland’s central bank, the People’s Bank of China, to test the digital yuan as a cross-border payment tool in Hong Kong.”
Chan noted that a project involving Thailand, the United Arab Emirates, mainland China, and Hong Kong was underway to explore the use of China’s Central Bank Digital Currency (CBDC) in order to enhance efficiency and reduce the costs of cross-border transactions. He further stated that the monetary authorities of these countries were involved in the project.
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