Continuous launching of digital RMB cross-border solutions
On 3 November, Di Gang, deputy director of the Digital Currency Research Institute of the People's Bank of China (hereinafter referred to as the "Digital Currency Research Institute"), spoke at the "Cross-border Application and Prospects of Hong Kong Digital RMB" forum at Hong Kong Fintech Week 2023. He said “Digital RMB always adheres to the three principles of 'non-disturbance', 'compliance' and 'interoperability' in the application of cross-border cooperation, complies the monetary sovereignty and monetary policies of all relevant monetary authorities, and fully respects the technical and business sovereignty of each jurisdiction."
Based on the above principles, Di Gang introduced that the Digital Research Institute and the Hong Kong Monetary Authority have conducted sufficient and in-depth research on cross-border cooperation, and relevant products or solutions are in the process of implementation.
Taking the digital RMB cross-border payment project between the Mainland and Hong Kong as an example, Di Gang pointed out that the cross-border application of digital RMB can realise two-way interoperability of payment services between Hong Kong and the Mainland. The results in convenience of cross-border payments for residents of the two places, and will facilitate the integration of the Guangdong-Hong Kong-Macao Greater Bay Area. Since the launch of the cooperation in September 2020, two phases of technical testing have been carried out, enabling residents of the Mainland and Hong Kong to use digital Renminbi in offline cross-border consumption and online cross-border e-commerce scenarios.
In order to incorporate the habit of Hong Kong residents and merchants using local currency and reflect the "non-disturbance" principle, the digital Renminbi and the "FPS" Fast Payment System of Hong Kong have been connected through local bank transfer in Hong Kong. This helps to support the interoperability of digital Renminbi and the Hong Kong account system to meet the needs of digital Renminbi exchange and merchant settlement.
Di Gang also mentioned that during the Hangzhou Asian Games, the Hong Kong delegation tried to recharge the digital RMB wallet through "FPS" and realise instant top-up. This was made possible by the interconnection between the digital RMB system and Hong Kong's "FPS”, which enables instant exchange between the two currencies - RMB and Hong Kong dollars. "In the future, under the guidance of the head office, the Digital Research Institute will work with the Hong Kong Monetary Authority to study and promote the connection between the digital RMB system and the “FPS” at infrastructure level to further improve the efficiency of straight-through processing of cross-border business and to reduce transaction costs."
Regarding the future development of digital Renminbi in Hong Kong, Di Gang made it clear that with the advancement of the bilateral cooperation project on digital Renminbi between the Mainland and Hong Kong, the two sides will continue to broaden the scope of acceptance of personal application scenarios and improve user experience. This will further promote the pilot applications of digital Renminbi between the two places.
“In the early stage, through on-site surveys of enterprises, we found that many enterprises have problems such as single cross-border payment channels, high costs, and low efficiency in international trade. We expressed our desire to participate in bilateral pilot projects with Hong Kong, and use digital Renminbi to reduce the cross-border transaction costs of enterprises.” Di Gang said. “In the future, under the framework of bilateral cooperation, the cross-border payment application of digital Renminbi in oil and gas and other bulk commodity trade and service trade can be studied.”
This article was published by the China Banking and Insurance News 中国银行保险报网讯 and has been translated into English. If there is any inconsistency or ambiguity between the English version and Chinese version, the latter one shall prevail.
The full text of the article, in Chinese, can be found below: