Exploring CBDC Potential in China’s Greater Bay Area: Transforming Commerce & Cross-Border Trade

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In a joint white paper by the British multinational bank Standard Chartered and PwC China, the potential applications of central bank digital currency (CBDC) were explored within China’s Greater Bay Area (GBA), which comprises Guangdong Province, Hong Kong, and Macao. The GBA was identified as an interesting test case due to the multiple currencies (pataca, Hong Kong dollar, and yuan) used across its jurisdictions.

The report highlights that around 3.8 trillion yuan (US$535 billion) of cross-border trade occurred within the region in 2021. With programmability playing a key role in the success of use cases in the GBA, it is suggested that the lessons learned could set a foundational framework for other CBDCs’ interaction in cross-border commercial scenarios.

The potential advantages of programmable CBDCs are realized through their ability to streamline supply chains, invoice settlements, and loyalty programs across retail and trade. Retailers could benefit from a more user-friendly model of loyalty programs using CBDC-based smart contracts, particularly for smaller retailers whose customers are less likely to engage with traditional methods.

Payment service providers could also benefit from the programmability of CBDCs to enhance their Know Your Customer (KYC) processes. The Hong Kong Monetary Authority recently launched its CBDC pilot project, e-HKD, which examines a range of use cases, including tokenization.

As programmable CBDCs continue to be researched and implemented, they have the potential to transform regional and global commerce, setting a new precedent for digital currencies and smart contracts. However, the report emphasizes that widespread commercial adoption relies on the collective efforts of industry participants to adapt and evolve in order to better serve their customers.

Source: Cointelegraph

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