While the world has been obsessing over DeFi, NFTs, and the surging crypto prices, China kept quietly testing its CBDC, the so-called digital yuan. In fact, it started moving forward with the testing quite quickly, and it recently started conducting tests regarding cross-border payments.
From what is known, the People’s Bank of China’s Digital Currency Institute did these tests in collaboration with the Hong Kong Monetary Authority, whose staff confirmed that the first phase of testing was completed. More importantly, they confirmed that the tests were successful.
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The same sources shared that the tests involved a number of different parties, such as merchants and a bank chosen by the authorities. More than that, the Hong Kong Monetary Authority also hinted that the following phase of testing is underway right now.
The statement says that,
We have tested the use of the related app, system connectivity and certain use cases such as cross-boundary purchases. We are discussing and collaborating with the PBOC on the next phase of technical testing, including the feasibility of broadening and deepening the use of e-CNY for cross-boundary payments.
HKMA has also been a part of a number of other collaborative efforts to explore the possibility of issuing a CBDC. In fact, it has been exploring this idea since 2017, participating in local and international projects alike. PBoC is only one of its partners, with some others including the Central Bank of the UAE, as well as the Bank of Thailand.
Digital yuan, as a large-scale instant payment system that was created by the government, rather than the private sector, has massive potential to be adopted internationally, by some of the largest enterprises. Not to mention the global domestic population, which is becoming increasingly connected.
As such, it will help bring fast, cheap, and efficient transaction system across the globe.