So far this year, there have been several developments for China’s central bank digital currency (CBDC) or eCNY. The latest is an extension of cross border activities using the digital yuan, specifically with the ASEAN.
The number of regions involved in the domestic digital yuan pilots continues to expand. Guangxi, on China’s Western border with Vietnam, is one of the latest to be included. Apart from domestic scenarios, its CBDC pilots plan to target the ASEAN with a focus on trade.
Three areas specified include:
- China-ASEAN cooperation
- China-ASEAN Expo, the major trade show in the region
- The Guangxi pilot free trade zone, which includes a port.
It’s still at the planning stage, so no further details were shared.
Another cross border digital yuan announcement this week
Guangxi is not the first formal cross border initiative. Credit for that goes to Hong Kong, which has two entirely separate cross border CBDC initiatives with China.
Last week, Shenzhen, a key city in Guangdong released regulations for creating a cross border digital yuan demonstration zone for the Guangdong-Hong Kong-Macao Greater Bay Area. This is part of the creation of an International Wealth Management Center.
Planning for cross border CBDC work with Hong Kong started in 2020 and progressed in 2021, focusing on retail payments.
Separately, there’s a wholesale CBDC platform, the MBridge Project, being developed by the central banks of Hong Kong, China, Thailand and UAE as well as the BIS. Given that Thailand is a ASEAN member, working on CBDC with the ASEAN is not new. But the difference is the Guangxi pilots will use the retail CBDC.
Other digital yuan news in 2023
CBDC pilots have started to support offline CBDC payments as well as using mobile phones that are switched off. Some phone models can be configured before shutdown to specify the number of payments that are allowed while it’s switched off.
Additionally, last week the People’s Bank of China announced that the digital yuan would be included in M0 reporting going forward. The figure at the end of 2022 was 13.61 billion yuan ($2 billion).
Meanwhile, a recent opinion piece published in a prominent outlet argued that limiting digital yuan usage to cash-like applications was too narrow.
