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Today the Monetary Authority of Singapore (MAS) announced an agreement with the People’s Bank of China to allow tourists from either country to use the pilot digital yuan, also known as eCNY. Enabling Chinese visitors to use their own central bank digital currency (CBDC) in a foreign country is a far bigger deal.
We believe some visitors to China have been able to use the digital yuan for some time. That was first piloted during the Winter Olympics in Beijing at the start of 2022.
There has been increasing integration between the digital yuan and Hong Kong, enabling visitors in both directions to use the CBDC. However, given China’s control over Hong Kong, that’s rather different.
This is not the first overseas collaboration for the eCNY. In October, China’s central bank signed a deal with the Central Bank of the UAE.
Foreign banks support eCNY domestically
In July, the Chinese subsidiary of Singapore’s DBS Bank launched a merchant collection solution for the eCNY. At the time, a DBS executive mentioned they were looking forward to building on that for cross border CBDC payments.
During the past couple of weeks, the Chinese subsidiaries of several foreign banks have launched eCNY solutions.
Singapore has no current plans to release a retail CBDC. However, it is planning to pilot a wholesale CBDC in 2024. The primary use cases are to support the settlement of interbank tokenized deposits and cross border settlement for securities transactions.
On that point, China is a key member of mBridge, the wholesale CBDC platform for cross border payments. Today’s announcement made no mention of an mBridge collaboration. The mBridge consortium is due to launch a minimum viable product in the first half of 2024. Despite 23 central banks observing the project, Singapore is not one of them.
MAS previously ran a similar cross border CBDC experiment, Project Dunbar. It has continued work through other initiatives such as Project Mariana and Project Ubin+.
