China will soon be testing its digital yuan in Hong Kong’s Greater Bay Area, according to a report from a local news outlet cited by Cointelegraph and Decrypt.
The Greater Bay Area (GBA) is a megapolis comprising nine cities, including Guangzhou, Shenzhen, Hong Kong and Macau. A major financial and tech hub in Asia, the GBA has a combined population of over 69 million people and a GDP of around $1.5 trillion.
He Xiaojun, director of the Local Financial Supervision Administration Bureau of Guangdong Province, told Southern Daily, a newspaper that serves as the Communist Party of China’s mouthpiece for Guangzhou, that Guangdong will play a major role in the cross-border adoption of the DCEP (digital currency electronic payment), as the digital yuan is formally known. He also noted that the province will play a crucial role in the integration of virtual banking activities with Hong Kong.
He said: “Guangdong will further encourage innovation, deepen business integration with Hong Kong and Macao in virtual banking and other aspects, break through data barriers, and innovate. The use of digital currency scenarios allows modern financial technology to better serve the construction and development of the entire Greater Bay Area.”
According to the official GBA website, Hong Kong is the “most open and international city” in the GBA, and hosts multiple international and trade hubs. The website also notes that Hong Kong plays an important role in the development of the GBA while “enjoying the dual advantages” of the intergovernmental approach known as “one country, two systems.”
Bai Hexiang, the President of People’s Bank of China’s Guangzhou Branch, said that financial institutions and firms in the region that deal with high volumes of cross-border trade would be first on the list of companies piloting the platform.
Xiao Lei, a financial analyst for Southern Daily, said, “Considering the large-scale cross-border adoption of DCEP in the future, Guangdong might be one of the most important markets.
“Guangdong has a well-developed business environment, large population and wide range of international trade, all which will help push with the adoption of DCEP.”