Hong Kong’s Financial Secretary spoke emphatically of the need for digital transformation and confirmed that the region will conduct technical tests using the digital yuan central bank digital currency (CBDC) in 2022.
Hong Kong’s Financial Secretary Paul Chan Mo-po, in a director’s essay published on the department’s website on June 27, said that the organization would begin technical tests for the digital yuan. Led by the idea of “keeping abreast of the times", Mo-po began his essay by saying that he was aware of how the Chinese public were enthusiastically using consumer vouchers and discounts from e-wallets. This motivated him to think about the effects of the digital renminbi, which he feels will feed into the public’s aforementioned interest in digital systems.
CBDC in Hong Kong
Mo-po then addresses the consumer voucher plan and the concerns that may arise from its use. After praising the use of the e-wallet system and the cashless experience, the Financial Secretary says that he is determined to promote digital transformation. He segues into the central bank digital currency (CBDC), with the transformation including research and development with respect to the digital yuan.
The news is unsurprising, given China’s strong determination to digitize its financial systems and the general economy. The digital yuan has already been piloted in several provinces, to a great degree of success by both public and governmental measures.
Hong Kong’s financial authorities will use the CBDC for cross-border payments, as well as wholesale and retail use in the coming year, according to Mo-po. He also refers to the application of a Hong Kong dollar digital currency, a digitized version of the nation’s own currency. The region will work with the country’s central bank to conduct tests for cross-border payments between Mainland China and Hong Kong.
Will China’s digital yuan follow?
The Financial Secretary speaks of trials in 2022, which could be the year when China officially launches the CBDC. Currently, it is only undergoing several pilots at different levels of the economy, which are progressing smoothly.
The bevy of trials that have been conducted and appraisals from authorities indicate a launch could come in the following year. No concrete date has been offered, but events such as Hong Kong’s Financial Secretary speaking positively of it only suggest a time sooner rather than later.
China is among the nations leading the development of a CBDC, while others are only just beginning their research and development. For the longest time, many governments were hesitant about working on a CBDC, given the novelty of the idea and the safe application of such a broad change to the economy.
However, the rise of China’s CBDC seems to have spurred other countries into working on it. Now, Canada, France, Japan, the European Central Bank, and others are all heavily investing in the effort. 2022 should see trials from all of these entities, and mark a significant transition towards a digital economy.