On 17 May 2024, Hong Kong announced that it will allow mainland China’s pilot digital Yuan currency to be used in shops within the city, marking a huge leap forward for Beijing’s efforts to internationalise the Yuan amid growing geopolitical tensions.
Digital Wallet Coming to Residents of Hong Kong
The programme announced by the Hong Kong central bank, is backed by Beijing, and will see mainland Chinese and Hong Kong residents being able to open digital Yuan wallets by using a mobile application developed by China’s central bank. This mobile wallet will permit residents to make payments in retail shops and some online stores in Hong Kong and in mainland China.
So far, transactions using the digital Yuan (named e-CNY) have been used predominantly for domestic retail payments in China, hitting 1.8 trillion yuan ($249.27 billion) by June 2023. According to the latest announcement from China’s central bank, around 120 million digital wallets were opened and currently, over 10 million merchants across 17 provinces and cities in the mainland accept digital Yuan payments.
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Restrictions in Place For Shoppers Using Digital Yuan
There will be a balance limit of 10,000 Yuan for each wallet used within the city. Single transactions and daily payments are capped at 2,000 Yuan and 5,000 Yuan, respectively, as per an announcement from the Hong Kong Monetary Authority (HKMA). Peer-to-peer transfers will not be allowed at the moment, according to the HKMA.
Commenting on the development, HKMA Chief Eddie Yue said, “By expanding the e-CNY pilot in Hong Kong users may now top up their wallets anytime, anywhere without having to open a mainland bank account, thereby facilitating merchant payments in the mainland by Hong Kong residents,”
There are a number of digital Yuan wallets currently in operation throughout the city, such as those operated by Ant Group and Tencent. Industrial and Commercial Bank of China, Bank of China Ltd, China Construction Bank Corp and Bank of Communications Co have been selected as e-CNY wallet operators.
Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
