Yi Gang, the governor of the People’s Bank of China, said the bank would work with the Hong Kong Monetary Authority on the digital yuan. He also noted that privacy is an important factor in design and development.
The People’s Bank of China is working with the Monetary Authority of Hong Kong to launch the digital yuan. Central bank governor Yi Gang announced the initiative in a speech at Hong Kong Fintech Week 2022. Various Chinese provinces are currently using central bank digital currency (CBDC).
Yi added that CBDCs have been gaining more attention in recent years and the technology can help economies. The governor said the central bank is working with the HKMA and other monetary authorities. The focus is “to better serve both global and domestic investors and to help enhance Hong Kong’s role as an international financial hub.”
He also said that China will work towards increasing cooperation with international institutions. Yi emphasized that international cooperation would be essential for the smooth introduction of the technology.
Yi said there were challenges, adding that he believes privacy is one of the biggest issues. This is something that China has previously promised to uphold. He explains the two-tier system for this purpose as follows,
At the first level, the PBOC supplies e-CNY to the authorized operators and processes information on inter-institutional transactions only. In Tier Two, authorized operators “collect only personal information necessary for their exchange and circulation services to the public.”
China CBDC Makes Progress
One of China’s most extensive experiments with a digital version of fiat currency. It has already completed several CBDC trials, recently, the country expanded CBDC testing to include Guangdong and three other provinces.
Chongqing province launched a tax payment pilot for the digital yuan earlier this year. It allows taxpayers to make their tax payments in CBDCs. Such pilots have increased China’s use of CBDCs by 1,800% over the past 12 months.
Many countries carry out cross-border CBDC pilots
There have been developments regarding international cooperation on CBDCs, including the participation of China. Twenty banks in regions such as China, Hong Kong, Thailand and the United Arab Emirates have completed a pilot for cross-border CBDC use. They executed 164 transactions worth over $22 million.
Meanwhile, India is set to begin bulk testing for its CBDCs today. The currency will be used for “settlement of secondary market transactions in government securities”. Retail investor CBDC trials will begin within a month.
All information contained on our website is published in good faith and for general information purposes only. Any action taken by the reader on the information found on our website is strictly at their own risk.