Once set up, payments for oil shipments from the Gulf could undermine the USD. In February 2021, the Digital Currency Institute of the PBOC and the Central Bank of the United Arab Emirates joined the Multiple CBDC Bridge, a cross-border payments project in partnership with the BIS Innovation Hub, the HKMA and the Bank of Thailand.The project will be linked between the wholesale CBDCs of these participants with standard messages from ISO 20022, proof-of-work, and PvP settlements. Hong Kong Monetary Authority is in talks with China to expand cross-border testing of the digital yuan after a successful first phase. The eCNY can also be used among countries participating in the Belt and Road Initiative (BRI) for payment or the Regional Comprehensive Economic Partnership, the digital yuan may become a new standard as it can make the transaction easier, faster and cheaper. It should be seen as a digital ticket or entry token to China's smart blockchain and AI-enabled logistics system.It’s likely that using eCNY for cross-border trade will enable businesses to use China’s digital logistics networks to track the process from container loading to customs clearance.Ĭhina could promote the overseas use of the digital yuan with a rollout in the Greater Bay Area. The advantages of eCNY, such as no fees and offline usage in addition to being the actual means of settlement rather than commercial bank money, could seriously challenge local payment service providers in the medium term. At the Boao Forum this year, PBOC Deputy Governor Li Bo said China is trying to make eCNY available not only to domestic users, but also international users such as visitors at the Winter Olympics. In October 2020, the on-the-ground tests became public for the first time and were expanded to another six cities in China.Īlthough the official timetable of launching eCNY has not been released yet, it is expected that a wider launch to the public might take place at the 2022 Winter Olympics. The Peoples Bank of China (PBOC) has been working on its sovereign digital currency programme since 2014, and it was not until August 2020 when it launched pilot trials to a selected group of China Construction Bank account holders for retail payment in four cities including Shenzhen, Suzhou, Xiongan New Area, and Chengdu. In May 2021, Zhejiang E-Commerce Bank (MYBank), an Alibaba-backed online lender, became the first private bank to join the eCNY tests. Officially called Digital Currency Electronic Payment (DCEP), or more commonly referred to the digital yuan or eCNY, China’s digital yuan is a form of central bank digital currency (CBDC) issued by the PBOC that will be distributed to the public by the six largest state-owned commercial banks in China. Out of which, China and Sweden are among the first major economies to pilot a digital currency. According to the Atlantic Council’s CBDC tracker, most economies are still in the stage of exploring the use cases, impact, and feasibility of CBDC, while 20 plus countries initiated small-scale testing of CBDC with a limited number of participants.
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