China has launched a digital yuan interconnection with the Hong Kong payment system, allowing tourists to purchase and top up digital yuan wallets using foreign accounts. The system, developed by the Digital Currency Research Institute of the People's Bank of China (PBOC), was tested during the 19th Asian Games held in Hangzhou, Zhejiang, from September 23 to October 8, 2023.
The new feature offers several advantages for tourists, who can now use the digital yuan to make payments in mainland China without having to resort to alternative payment methods or exchange their currency in advance. The People's Daily, a Chinese state-run newspaper, praised the initiative, noting that the digital yuan system is "more controllable" with shorter transaction links and lower transaction costs.
During the trial at the Asian Games, athletes from different countries used the system to download the digital yuan wallet, open an account, and make payments and top-ups. They provided positive feedback, stating that the wallet was "simple and convenient to use" and made their purchases in the Athletes Village "easy and convenient."
The Chinese government and the PBOC have been actively promoting the adoption of the digital yuan in various payment scenarios across China. In September, the PBOC implemented a QR-based interoperable standard that is compatible with multiple payment systems, including the digital yuan. The city of Jinan also recently implemented digital yuan payments for transportation fares after conducting a limited pilot in July.
The launch of the digital yuan interconnection with the Hong Kong payment system is a significant step forward in China's efforts to promote the digital yuan both domestically and internationally. It is also a sign of China's growing interest in developing cross-border digital currency payments.
The launch of the digital yuan interconnection with the Hong Kong payment system is a significant development with several potential implications.
First, it could help to boost the adoption of the digital yuan among tourists and businesses in Hong Kong. This would provide a boost to the Chinese economy, as it would allow Chinese businesses to accept payments from Hong Kong customers more easily. It would also make it more convenient for Hong Kong residents to travel to mainland China, as they would be able to use the digital yuan to make payments without having to exchange their currency.
Second, the new feature could help to promote the cross-border use of the digital yuan. This could have a significant impact on the global financial system, as it would create a new alternative to traditional cross-border payment methods, such as SWIFT.
Third, the launch of the digital yuan interconnection with the Hong Kong payment system is a sign of China's growing ambitions in the digital currency space. China is one of the leading countries in the world in terms of digital currency development, and the launch of this new feature is a sign that China is serious about promoting the international use of the digital yuan.
It remains to be seen how widely the digital yuan will be adopted in Hong Kong and internationally. However, the launch of the new interconnection feature is a significant step forward in China's efforts to promote the digital yuan.
