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Standard Chartered becomes the first foreign bank to join China's CBDC pilot testing

The bank will explore the potential of e-CNY in cross-border merchant payments, trade financing, and supply chain financing as part of the pilot

Shashank Bhardwaj
Published: Nov 28, 2023 05:02:06 PM IST

Image: ShutterstockImage: Shutterstock

On November 27, British multinational bank Standard Chartered announced its participation in the pilot testing program of China’s central bank digital currency (CBDC) known as the digital Yuan (e-CNY or digital RMB). This move makes Standard Chartered the first foreign bank to engage with the country’s CBDC.

According to the announcement, Standard Chartered, in collaboration with City Bank Clearing Services Co, will facilitate e-CNY transactions for its clients. It will allow them to purchase, exchange and redeem e-CNY within their bank accounts.

Beyond basic currency conversion, the bank will explore the potential of e-CNY in domains, such as cross-border merchant payments, trade financing, and supply chain financing. This involvement indicates the bank’s significant interest in China’s CBDC pilot testing program, which is currently active in 26 cities and provinces across the country.

Xiaolei Zhang, president of Standard Chartered China, expressed optimism about the future of the digital renminbi (RMB). “As an international bank rooted in the Chinese market for 165 years, Standard Chartered is optimistic about the development prospects of digital Renminbi.”

Standard Chartered is actively engaged in the digital currencies landscape. Last year, it participated in the ‘Multilateral Central Bank Digital Currency Bridge’ proof-of-concept test project in Hong Kong. The test project aimed to provide cross-border payment settlement services to retail and enterprise clients.

In May 2023, Standard Chartered published a report on ‘Central Bank Digital Currency to Create a Future Banking Ecosystem’ in collaboration with professional services firm PricewaterhouseCoopers (PwC) China. The report explores the potential use case of CBDCs in retail, trade, and supply chain finance.

Standard Chartered’s interest in the digital Yuan stems from the growing success of China’s CBDC pilot program, which began in 2019. As of August 2023, over 5.6 million registered merchants across the country accepted e-CNY. Moreover, 360 million transactions were recorded, with the total value of e-CNY transactions reaching 100.04 billion yuan ($13.9 billion).

The initiative by Standard Chartered to participate in China’s CBDC pilot program is a step forward towards the broader adoption of CBDCs. It is anticipated that in the coming years, other banks will follow in the footsteps of the British bank in exploring the potential use cases of CBDCs.

The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash