Chinese banks explore local e-CNY wallets for foreign firms via upgraded platform

Beijing is broadening its central bank-backed digital currency, the e-CNY, to encompass offshore institutions, including Hong Kong branches. Banks are also investigating the possibility of establishing local e-CNY wallets for foreign corporations to enhance cross-border integration. Lu Yuan, deputy head of the People's Bank of China's digital currency research institute, noted during a panel discussion at Hong Kong's Fintech Week that 30 domestic banks currently operate e-CNY, and the goal is to extend this service to offshore banks shortly.

Lu expressed hope that Hong Kong branches of established banks would soon offer e-CNY accounts to their enterprises and clients. Currently, overseas banks engage with the digital yuan via the Cross-border e-CNY Transfer Services (CBETS) platform, a novel infrastructure for cross-border e-CNY transactions. Launched in June, the upgraded CBETS platform facilitates 24/7 digital payments without necessitating modifications to existing IT systems.

Industrial and Commercial Bank of China (ICBC), the largest bank in China by assets and a key e-CNY operator, has achieved transaction volumes in the hundreds of billions of yuan. ICBC executive Zhang Yi encouraged overseas institutions to continue exploring the opening of e-CNY enterprise local wallets to provide additional advantages to foreign enterprises.

Additionally, Zhang urged other banks to consider integrating e-CNY into their operations, emphasizing that the CBETS platform operates without charges. HSBC's Managing Director and Group Head of Digital Currencies, Corporate and Institutional Banking, Lewis Sun, reported robust customer demand for cross-border renminbi settlements.

HSBC has already introduced both retail and wholesale e-CNY services in mainland China, with corporate clients receiving direct deposits into their operational accounts. Sun highlighted that through multilateral initiatives like mBridge and CBETS, transaction volumes have steadily increased, indicating that corporate clients are increasingly incorporating e-CNY into their daily operations.

A report from Hong Kong's Financial Services Development Council (FSDC) suggests optimizing regulatory coordination, improving payment infrastructure, promoting digital assets and tokenization, expanding cross-border trust infrastructure, and solidifying Hong Kong's position as a multicurrency payment center. By facilitating diverse payment solutions to coexist and interact, Hong Kong can cater to varied market demands while maintaining the flexibility to adapt to technological advancements and evolving standards.

As of September, approximately 4.3 billion digital yuan transactions totaling around 31 trillion yuan had been processed, according to data from the central bank.