China is in the process of introducing a digital version of its yuan currency. Photo: iStock

The People’s Bank of China (PBoC) and the Hong Kong Monetary Authority (HKMA) are in the preliminary stages of pilot testing the digital yuan (e-CNY) for cross-border payments, Cointelegraph reports.

HKMA chief executive Eddie Yue said in a press release: “The HKMA and the Digital Currency Institute of People’s Bank of China are discussing the technical pilot testing of using e-CNY, the digital renminbi issued by the PBoC, for making cross-border payments, and are making the corresponding technical preparations.”

China is leading the world in central bank digital currency (CBDC) development, with its digital yuan pilots processing $300 million worth of transactions as of early November. The first pilot projects were launched in four major cities in April before expanding to nine metropolitan areas. 

Hong Kong has been exploring potential use cases for CBDCs for at least the past three years, said Yue noting that the HKMA launched a joint research project with the Bank of Thailand in 2019 to address various concerns related to cross-border payments and digital currencies. Yue said this project has entered its “second stage,” which looks at the operability and scalability of cross-border CBDC participation. 

Yue said the long-term goal is to create an integrated regional cross-border payment platform: “From a longer-term perspective, we have a good chance of building a regional cross-border payment platform by riding on the global trend of strengthening cooperation in cross-border payment.”