Hong Kong has introduced personal e-CNY wallets for cross-border payments, making it the first region outside mainland China to offer this service. The Hong Kong Monetary Authority (HKMA) announced that residents and foreign nationals in Hong Kong can now open e-CNY wallets using their local mobile phone numbers with four major mainland Chinese state-owned banks: the Bank of China, the Bank of Communications, the China Construction Bank, and the Industrial & Commercial Bank of China.
Unlike traditional digital wallets, the e-CNY wallet is fully endorsed by the People’s Bank of China, emphasized Howard Lee, the HKMA Deputy Chief Executive. The main objective of the digital yuan is to provide Hong Kong residents with a safe and convenient option for cross-border payments when traveling to the Greater Bay Area integration zone, which includes Hong Kong, Macao, and nine cities in Guangdong province.
In January 2024, it was reported that the Chinese central bank planned to expand the digital yuan to Hong Kong to facilitate cross-border payments. However, retailers in Hong Kong are concerned that there is more demand for mobile payment in mainland cities such as Shenzhen, which could divert consumption away from Hong Kong.
Currently, around 300 merchants in Hong Kong accept e-CNY payments, but with certain limits. Individual wallet balances are capped at ¥10,000 ($1,380), single transactions are limited to ¥2,000, and annual spending is restricted to ¥50,000. Hong Kong residents can top up their wallets via the Faster Payment System (FPS), which has been integrated with the e-CNY payment infrastructure.
Gary Ng, a senior economist at Natixis Hong Kong, described the introduction of e-CNY wallets in Hong Kong as a significant step towards the internationalization of the yuan. He expects more companies to adopt the system in the future. According to the People’s Bank of China, domestic transactions facilitated by the digital yuan reached 1.8 trillion yuan (approximately $249 billion) by the end of June 2023. This surge in usage has been driven by the opening of over 120 million individual e-CNY wallets nationwide, with over 29 million digital yuan wallets opened in Suzhou.
Despite this growth, many workers still prefer physical cash and actively convert their e-CNY into fiat currency. This is due to perceived lack of utility and privacy concerns associated with CBDC, as reported by CryptoNews.
