However, the bill on the agenda in the USA appears as a potential obstacle to the international use of digital yuan. This development could herald a significant change in the global financial system, against the backdrop of the rise of digital currencies and increasing tensions between countries.

Under the pilot program, Hong Kong residents can currently deposit up to CNY 10,000 (about $1,385) into their digital wallets through 17 retail banks, including Standard Chartered Bank, ZA Bank and DBS Bank. According to the e-CNY user guide published by the HKMA, the application can be downloaded from both Google Play and Apple App Store. However, it is important to note that during the pilot program, e-CNY wallets can only be used for cross-border payments and personal transfers will not be allowed.

This pilot program is an important step for China. Hong Kong, a traditionally strong financial center, could serve as a springboard for the internationalization of the digital yuan. If the pilot program is successful, e-CNY is likely to expand to other Chinese SARs such as Macau and Southeast Asian countries.

The People’s Bank of China has been working on digital yuan since 2014. One of the main motivations for the development of e-CNY is to reduce the use of cash and give the government the ability to track payments more closely. The digital yuan also aims to free China’s international trade and financial system from the dominance of the US dollar.

However, the US is worried about the rise of the digital yuan. US officials are concerned that the digital yuan could become an alternative means of payment to the US Swift financial messaging system and weaken US control of the international financial system.

In light of these concerns, Senator Rick Scott introduced the “China CBDC Ban Act” in November 2023, which seeks to prevent US financial services operators from interacting with China’s digital currency. The bill would ban U.S. post offices, remittance firms, retail investment platforms and all money services businesses from facilitating any transactions involving China’s digital yuan.

China’s digital yuan pilot and the US’ proposed ban highlight the potential impact of digital currencies on international payments and financial competition between countries. Tensions between the US and China could become part of a broader cost struggle that could include digital currency strategies.

These developments may lead to a significant transformation in the global financial system in the coming years. The need for international cooperation is increasing for other countries to develop their own digital currencies and to ensure compatibility between these currencies. The ultimate fate of the digital yuan will be the result of both technological innovations and geopolitical tensions between the United States and China.

While China is trying to increase its influence in the global financial system with digital yuan, the USA is taking steps to prevent this move. The rise of digital currencies in the coming period may significantly change the global financial system and the balance of power between countries. These developments should be followed closely and time will tell how the future of digital currencies will be shaped.