If the Federal Reserve still wants proof of China’s intention to challenge the dollar’s hegemony, it should look no further than a small experiment currently under way in Hong Kong.
Last month, Bank of China (Hong Kong), one of the city’s big deposit-taking institutions, had its offer of 500 trial accounts tied to the e-CNY, the electronic version of official Chinese money, snapped up in two days. The customers are each being gifted 100 yuan in digital form, which they can spend at mainland stores, the JD.com website or a supermarket chain in Hong Kong. The modest debut underscores Beijing’s resolve: Even before the digital yuan could become a payment instrument of choice at home, authorities are testing its capabilities in another market.
Expect the trials to pick up speed as the e-CNY integrates with Hong Kong’s so-called Faster Payment System, a 24x7 network for people to pay one another and settle bills instantaneously using mobile numbers, email addresses or QR codes. Once that link is in place, someone with a bank account in Hong Kong should be able to shop with digital yuan on Alibaba Group Holding Ltd.’s Tmall and Taobao sites without the fees involved in credit-card transactions — or the delays and uncertainty faced when paying through local bank accounts linked to the AlipayHK wallet.