China Aiming for International Digital Yuan Expansion – e-CNY Going Global?
Per Alpha Factory (via EastMoney), fintech firms such as MOG Digitech Holdings are making headway in the CBDC sector, and are eyeing global uses for the e-CNY.
The media outlet noted that the e-CNY’s global expansion has been a hot topic at this month’s Belt and Road Forum for International Cooperation (BRF).
The forum saw China seal “digital currency” cooperation agreements with central bankers from the UAE and Indonesia.
Economic cooperation agreements were “signed by more than 150 countries and more than 30 international organizations” at the fair, Chinese state media outlets claimed.
Officials from Serbia’s central bank also signed yuan-related settlement agreements with Chinese counterparts.
The forum is the show-piece event of the Belt-and-Road Initiative (BRI), China’s ambitious effort to fund infrastructure projects around the world.
The media outlet also noted that Chinese players want to integrate the e-CNY with the Cross-Border Interbank Payment System (CIPS).
The CIPS is a settlement platform created in 2015 to internationalize the yuan and has frequently been mooted as a SWIFT alternative.
Alpha Factory wrote:
“The digital yuan and the CIPS are complementary, and the CIPS is [playing] an indirect catalytic role in the development of the e-CNY.”
But more significant still may be the fact that China’s CBDC can bypass systems like SWIFT and CIPS altogether, allowing for “faster and smoother settlements” in the yuan. The media outlet explained:
“In the existing international settlement system, cross-border payments rely heavily on accounts […] and banks. [With the CBDC], there is no such thing as an account, only the concept of a digital wallet. Overseas companies can [open] CBDC wallets developed by domestic banks, and do not need to hold an account at an overseas bank to participate.”
MOG’s recent H1 report contained details of the firm’s success with digital yuan-powered “supply chain financing scenarios.”The company has also “received support” from some of the country’s “highest-level institutions,” the media outlet wrote, as it looks to offer digital yuan-powered insurance and reinsurance products.
Many other Chinese players, including major banks, have been exploring digital yuan-powered supply chain solutions that make use of smart contract technology.
China Eyeing Overseas Progress for the e-CNY?
Meanwhile, in an interview published by Stockstar, the IT firm and digital fiats interoperability player Sifang Jingchuang explained that it has “expanded its business in BRI countries such as Thailand and Malaysia.”
The company provides fintech solutions to major international banks such as HSBC, Standard Chartered, and Thailand’s KTB.
The firm said it has “actively explored the application of CBDC in cross-border payments” and has accrued “technology and successful use cases.”
Sifang Jingchuang said that it has also “assisted financial institutions” to “participate in the application and promotion” of the digital yuan in “many regions.”