Hong Kong Firms Make First Cross-border Digital Yuan Commodity Payments

Last updated: December 14, 2023 04:48 EST
. 1 min read

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The flags of Hong Kong and China fly outside large office towers. — Source: leungc/Adobe

Hong Kong-based firms have made the first “cross-border” commodity payments with the Mainland Chinese digital yuan, as the CBDC takes its first international steps.

Per Hong Kong Today, several Hong Kong firms took part in the Bank of China (Hong Kong)’s “Enterprise Digital RMB Cross-border Transaction Pilot” (literal translation).

The bank says it teamed up with its “parent company,” the Mainland-based Bank of China, for the pilot.

The bank added that Hong Kong and Mainland firms have processed some $3.4 million worth of payments using the solution.

Previous Hong Kong-Mainland pilots have focused mainly on retail uses for the CBDC, in sectors such as duty-free shopping and public transport.

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However, the Bank of China’s pilot marks a breakthrough in the B2B field. It comes shortly after firms in Singapore and Taiwan began exploring e-CNY usage scenarios.

China’s closest allies, including Russia and Belarus, have talked up the idea of making cross-border CBDC payments.

The bank explained that an importer paid CBDC for a shipment of iron ore, paying for “the entirety” of the bulk transaction in e-CNY. The bank’s Hong Kong arm explained:

“The [digital yuan] is not just for use in retail payments. [Firms can] make full use of its technical features to gain greater value from corporate cross-border payment scenarios.”

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The Bank of China (Hong Kong) added that it has now “built basic capabilities for local enterprises” that want to use the e-CNY to trade with Mainland firms.

These include digital yaun “wallet opening, transfer, and redemption services, as well as others.”

The bank said that using the CBDC would “not only help reduce enterprises’ cross-border settlement costs, but also improve transaction efficiency.”

The bank concluded that it plans to further improve its range of CBDC services.

It said the solution would “support more corporate customers who want to use the digital yuan for cross-border settlements.”

Late last month, Hong Kong a government official claimed that “more Hong Kong-based banks” were set to join the e-CNY pilot.

The likes of HSBC, Hang Seng, and Standard Chartered have already joined the pilot as Beijing eyes further expansion.