China is expanding the use cases of its central bank-issued digital currency (CBDC), dubbed the digital yuan, or e-CNY, for its “Belt and Road” initiative and cross-border trade. The digital yuan, also known as the digital renminbi, was one of the first CBDCs developed and extensively tested. Although there hasn’t been an official launch yet, the Chinese government has expanded its testing parameters to include multiple cities and millions of people.
In the city of Xuzhou, the departure point for many Chinese freight trains bound for Europe, a plan was published to promote the use of Chinese digital currency in cross-border trade. There are 18 regular cross-border rail connections from the city to 21 nations in Asia and Europe, reported the South China Morning Post.
Xuzhou is a center of commerce and plans to promote the use of e-CNY to pay for services and storage fees for goods carried on cross-border trains. The experiment plans to expand the use of the digital yuan to pay taxes and public services in the city in the future.
Jiangsu province, in particular, has been quite proactive in promoting use cases for the digital yuan. Changshu, another city in the province, announced that it will pay officials and people working for public institutions with digital yuan.
In addition to Xuzhou, The Hong Kong Monetary Authority announced that the Guangdong-Hong Kong-Macao Greater Bay Area will be a sandbox for cross-border digital yuan payments.
“The HKMA is working with the People’s Bank of China, the central bank of mainland China, to test the digital yuan as a cross-border payment instrument in Hong Kong,” said Darryl Chan, deputy chief executive of the HKMA.
Chan added that the HKMA, China and two other nations were studying another cross-border project involving Thailand and the United Arab Emirates to “Improve efficiency and reduce the cost of cross-border transactions.”
The Chinese government has stepped up its CBDC efforts at a time when international trading markets are moving away from the standard US dollar. Recently, China has signed several trade agreements with countries like Russia and India based on their national currencies against the US dollar.
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