HSBC and Standard Chartered, along with Hang Seng Bank and Fubon Bank, have become the first foreign-funded banks to join China’s central bank digital currency (CBDC) pilot. Over 40 state-owned banks have already launched their services on the e-CNY app, developed by the People’s Bank of China (PBOC). This move aims to expand the use of digital currency in both domestic and cross-border payments.
Clients of these banks will be able to use the e-CNY app for sending and receiving money, making online and offline payments, and topping up digital wallets by linking them to existing bank cards or mobile banking accounts. Standard Chartered China’s Executive Vice-Chairman and CEO, Jerry Zhang, emphasized the e-CNY’s role in enhancing the payment and consumption experience, strengthening connections between China and the international financial market.
The participating banks anticipate broader applications for the e-CNY in areas such as merchant payments, trade finance, and supply chain finance. Hang Seng Bank (China)’s CEO, Song Yuesheng, expressed the bank’s commitment to accelerating e-CNY applications in retail scenarios to support retail service providers and stimulate consumption.
Li Ying, Head of Financial Institution Ratings at S&P Global (China) Ratings, noted that foreign banks, compared to large Chinese banks, typically have less diversified product lines in China. However, their active participation in the e-CNY pilot program demonstrates their commitment to the Chinese market and may pave the way for more foreign-funded banks to follow suit.
Foreign banks have been striving to keep pace with China’s domestic banks and have also been exploring opportunities related to Hong Kong’s local digital currency, e-HKD. HSBC and Standard Chartered have been participating in an e-HKD trial run since May, aiming to explore its potential use in areas like offline payments and tokenized deposits.
Central bankers, including Mu Changchun, the director of PBOC’s Digital Currency Research Institute, are advocating for stronger collaboration to promote the use of digital currencies in cross-border payments. Mu suggested the establishment of a multilateral “bridge” directly connecting the central banks of different countries, enhancing efficiency and reducing costs compared to existing correspondent bank-based cross-border payment systems. Mu also emphasized that CBDCs should contribute to the healthy development and stability of the global financial system.
