The Chinese government’s latest initiative to promote the adoption of its central bank digital currency (CBDC) in Hong Kong seems to have received a lukewarm response from its citizens. Despite the recent installation of digital yuan hard wallet dispensers in Shenzhen, which were exclusively programmed to cater to Hong Kong residents, only 625 have obtained these wallets in the first four days.
This initiative, launched by the Bank of China and smart card provider Octopus Card, aimed to issue 50,000 hard wallets by March 31. The wallets offer a 20% discount on purchases from 1,400 local vendors, subsidized by the government, to incentivize adoption. However, the initiative’s failure to attract more Hong Kongers towards it has been a cause for concern.
Even though the promotion of digital yuan in Hong Kong has a greater political objective to integrate the city into the Guangdong-Hong Kong-Macao Greater Bay Area, the adoption rate of e-CNY in the country, in general, has been slow despite the Bank of China’s best efforts.
Despite this, the local authorities in Shenzhen have pledged to continue promoting the digital yuan. A new SIM card hard wallet that combines financial and communicational functions is in the works. However, the slow adoption rate suggests that more needs to be done to educate citizens on the benefits of CBDCs and overcome any reservations they may have.
The government has launched various initiatives to increase the use of digital yuan, such as subsidies and consumption coupons. Still, the cumulative e-CNY transactions have only crossed 100 billion yuan ($14 billion) since its introduction to the market two years ago, indicating a long way to go.
Despite the slow adoption rate, the Chinese government continues promoting the digital yuan and expanding its use cases. The recent rollout of digital yuan hard wallets in Hong Kong may not have been a massive success, but it represents a significant step towards the broader goal of integrating CBDCs into the global financial system.
