China is enlarging the application of its digital yuan or e-CNY, to ease trade and cross-border transactions within its Belt and Road initiative, media reports said.
The Chinese government has been testing the digital yuan in multiple cities and among millions of people, but it has yet to launch it officially.
However, plans have been made to encourage the usage of digital yuan for paying service fees and storage charges for goods transported by cross-border trains departing from Xuzhou city, which is the originating point for many goods trains bound for Europe.
The experiment, which is set to be launched in Xuzhou City, will extend the usage of the digital yuan to pay taxes and utility services in the city in the future. Jiangsu province has taken significant steps towards advancing the use cases of digital yuan. Changshu, a city within the province, recently announced that it would pay civil servants and people who work for public institutions using the digital yuan.
Using the digital yuan for cross-border payments will be experimented with in the Guangdong-Hong Kong-Macau Greater Bay Area, according to the Hong Kong Monetary Authority (HKMA). Darryl Chan, the deputy chief executive of HKMA, has stated that they are collaborating with the People’s Bank of China to experiment with the digital yuan’s potential as a cross-border payment mechanism in Hong Kong.
Chan further mentioned that HKMA, along with China and two other nations, is exploring a cross-border initiative with Thailand and the United Arab Emirates to enhance the efficacy and minimize the expenses associated with cross-border transactions.
The Chinese government’s ramped-up efforts to develop and test the CBDC come when international trade markets move away from the standard U.S. dollar. Recently, China has completed multiple trade treaties with Russia and India based on their national currency over the U.S. dollar.
Amid the shift of global trade markets from the prevalent use of the U.S. dollar, the Chinese government has intensified its endeavours to create and experiment with the CBDC. In recent times, China has entered into several trade agreements with Russia and India based on their respective national currencies instead of the U.S. dollar.
