China, Hong Kong, Thailand, and the UAE will test central bank digital currencies in cross-border payments, according to a recent statement by the Hong Kong Monetary Authority (HKMA).
The Central Bank of the UAE and the Digital Currency Institute of People’s Bank of China will join the second phase of the Project Inthanon-LionRock1, a central bank digital currency project for cross-border payments initiated by the HKMA and the Bank of Thailand, the HKMA said.
“This joint effort is strongly supported by the Bank for International Settlements Innovation Hub Centre in Hong Kong and the project has been renamed as “m-CBDC Bridge”,” HKMA noted.
Building on the experience learnt from Project Inthanon-LionRock, the m-CBDC Bridge project will further explore the capabilities of distributed ledger technology (DLT), through developing a proof-of-concept (PoC) prototype, to facilitate real-time cross-border foreign exchange payment-versus-payment transactions in a multi-jurisdictional context and on a 24/7 basis, HKMA added.
The m-CBDC Bridge project will also explore business use cases in a cross-border context using both domestic and foreign currencies, according to the HKMA statement.
“The outcome of the project is expected to alleviate the pain points in cross-border fund transfers, such as inefficiencies, high cost and complex regulatory compliance,” HKMA said.
China’s digital currency test
In a separate development, the Chinese city of Chengdu said recently that it will hand out about US$6 million in a test of the central bank’s digital currency, according to a CNBC report.
Earlier this month, Beijing launched a similar test with US$1.5 million distributed to 50,000 applicants while other cities such as Shenzhen and Suzhou had their own tests in the previous few months, the report says.
Locals could join a lottery yesterday or today for one of the 200,000 vouchers each of which’s worth about US$27 to US$37, according to the report, adding that lottery winners can use the vouchers by shopping at local retailers and on the JD.com e-commerce app during Mar 3-19.