British multinational bank Standard Chartered and PwC China have teamed up to produce a white paper on central bank digital currency (CBDC) applications in China’s so-called Greater Bay Area – the province comprising Guangdong, Hong Kong and Macau. Programmability will make the difference, conclude.
The Greater Bay Area (GBA) presented an interesting test case due to the multiple currencies used in multiple jurisdictions. Macao uses the pataca, while Hong Kong uses the Hong Kong dollar and China uses the yuan. According to the report, some 3.8 trillion yuan ($535 billion) in cross-border trade moved in the region in 2021.
Programmable CBDC is being investigated in Hong Kong. According to the report, it offers a number of advantages:
“The successful launch of programmable use cases on the GBA could provide a foundational framework for how other CBDCs could interact in cross-border business scenarios.”
“Widespread commercial adoption depends on collective efforts among industry participants to better serve their customers,” the report added. CBDC smart contracts could be deployed in the application of cross-border trade, in the supply chain for invoice settlement and greater currency flexibility, and by retailers to streamline service and loyalty programs through the use of a multi-currency wallet. only.
The report took a detailed look at CBDC-based loyalty programs. Easier-to-use loyalty programs would benefit smaller retailers, whose programs would otherwise be less likely to attract consumers. According to the report, payment service providers could also take advantage of smart contracts for know-your-customer processes.
#Shenzhen and #Guangzhou ranked third and fourth behind Beijing and Shanghai, while all 11 cities in the #Guangdong-Hong Kong-Macau Greater Bay Area made the 2022 Chinese Cities of Opportunity report released by world-leading consultancy @PwC. #GDupdates #GBAfocus [/IC] pic.twitter.com/6KF1fkOUcH
— Info Guangdong (@iGuangdong) September 6, 2022
The Hong Kong Monetary Authority has recently launched a CBDC pilot project studying various use cases, including tokenization.
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