Hong Kong expands the usage of digital renminbi and plans to raise wallet limits?

Since the expansion of the cross-border payment pilot program for Digital Currency (e-CNY) in Hong Kong in May 2024, this Central Bank Digital Currency (CBDC) project led by the People's Bank of China is integrating into the financial bloodstream of Hong Kong with unprecedented depth and breadth. Recently, the Hong Kong authorities have sent clear signals, planning not only to further expand the local merchant network accepting Digital Currency payments but also actively exploring the possibility of increasing Wallet transaction limits and introducing more application scenarios in collaboration with relevant departments in the Mainland. This series of measures not only indicates that the application of Digital Currency in Hong Kong will enter a new stage but also highlights the unique “testing ground” and “super connector” role that Hong Kong plays in the national financial technology strategy, especially in the process of Renminbi internationalization.

Pilot Status

Looking back at the development of the digital RMB in Hong Kong, after the pilot program expanded in May 2024, Hong Kong residents only need to use a local Hong Kong mobile number to open and use a digital RMB Wallet, without the need to bind a mainland bank account. More importantly, users can easily and quickly recharge their wallets through the local “Faster Payment System” (FPS) via 17 local retail banks. This simplified process for opening and recharging greatly reduces the barriers to use, allowing digital RMB to play a role in cross-border consumption scenarios in the Guangdong-Hong Kong-Macao Greater Bay Area and even in 26 pilot regions in mainland China.

The Secretary for Financial Services and the Treasury of the Hong Kong SAR Government, Christopher Hui, has given high praise for this. He emphasized that the promotion of the digital renminbi “provides residents of both places with an additional safe, convenient, and innovative payment option, enhances the efficiency of cross-border payment services and user experience, and helps to promote connectivity between the two places.” As time goes by, the number of local retail merchants in Hong Kong accepting digital renminbi payments is steadily increasing. Although the Hong Kong Monetary Authority (HKMA) has not released specific statistics on the number of Wallets opened or merchant coverage, market feedback and official statements indicate that its acceptance in the retail sector continues to rise.

The Hong Kong Monetary Authority is also actively encouraging local banks to recruit more retail merchants to join the digital renminbi acceptance network, aiming to build a more complete and convenient payment ecosystem. Through close communication with the Digital Currency Research Institute of the People's Bank of China and mainland operating institutions in their Hong Kong subsidiaries, the Monetary Authority continues to track usage, gather user feedback, and provide decision-making basis for subsequent optimization and upgrades.

Despite the progress made in promoting the digital renminbi in Hong Kong, the current wallet usage restrictions are becoming a bottleneck for further unleashing its potential. According to the current framework, Hong Kong users' digital renminbi wallets face threefold restrictions: Single transaction limit: The amount for each transaction must not exceed 2,000 CNY (approximately 280 USD). Wallet balance limit: The maximum amount that can be held in the wallet is 10,000 CNY (approximately 1,400 USD). Annual cumulative payment limit: The total amount paid in a year must not exceed 50,000 CNY (approximately 7,000 USD).

The setting of these restrictions is mainly based on the simplification of the current Wallet registration process—users can activate their accounts with just a mobile phone number without the need for real-name verification (KYC). This represents a balance achieved between convenience and risk control. However, as the application deepens, this balance point is facing new challenges.

Some legislative council members have raised inquiries, believing that the current limits may not be sufficient for business people or high-frequency consumers who frequently travel between the mainland and Hong Kong. Whether it's for large expenses during business trips or the accumulation of daily cross-border consumption, the existing limits may seem inadequate. As a result, there have been calls from both the market and users to increase the limits. This is not only to meet broader consumption needs but also to gradually align Hong Kong's digital renminbi Wallet functions with those of more comprehensive wallets that have been validated in pilot cities on the mainland.

Future Path

In response to market expectations and real demand, the Hong Kong authorities have taken proactive action. Director Hui Chengyu clearly stated during the Legislative Council inquiry that the Hong Kong Monetary Authority is actively discussing the feasibility of upgrading the Wallet with the People's Bank of China. The core objectives of the upgrade target two main directions: first, to increase usage limits, and second, to support more application scenarios.

He explained: “The People's Bank of China and the Monetary Authority are currently discussing the arrangements and feasibility of upgrading the Digital Money Wallet, in order to increase its usage limits and support more application scenarios. As the discussions are still ongoing, the specific plans and timetable are yet to be finalized.” Although this statement is cautious, it clearly conveys the official positive stance on increasing the limits and expanding the functions.

It is foreseeable that future wallet upgrades may introduce a hierarchical management mechanism. For example, maintaining the existing anonymous wallets based on mobile phone numbers, and on this basis, providing a higher credit and more powerful “upgraded version” wallet for users who are willing to provide more identity information (such as Hong Kong ID card) for real-name verification. This not only meets the differentiated needs of different users but also aligns with the global regulatory trends of anti-money laundering (AML) and counter-terrorism financing (CFT), paving the way for the application of digital RMB in broader and more complex financial activities.

Hong Kong's vision for Digital Currency is far beyond just the retail payment dimension. Officials have stated that future functional upgrades will explore areas beyond consumer payments, extending into deeper economic activities. These include: Supply Chain Finance: Utilizing the traceability of digital RMB and the functions of smart contracts to optimize the payment and settlement processes between enterprises, enhancing the transparency and efficiency of supply chain financing. Cross-border salary payments: Providing a more efficient and low-cost salary distribution channel for Hong Kong residents working in the mainland or mainland employees working in Hong Kong. Other enterprise-level application scenarios: Exploring the application potential of digital RMB in large enterprise payments, cross-border trade settlements, and other fields.

The expansion of these enterprise-level use cases requires the maturity of technology, coordination of cross-regional regulation, and the collaborative development of market demand. Once achieved, the digital renminbi will transform from a convenient payment tool into a key financial infrastructure that facilitates the efficient flow of economic factors within the Greater Bay Area and even broader regions.

Dual-track parallel

While promoting the application of the digital RMB on the retail end, Hong Kong is also playing a key role on another front - actively participating in the “Multilateral Central Bank Digital Currency Bridge” (mBridge) project. This project entered the Minimum Viable Product (MVP) stage in June 2024, aiming to achieve direct cross-border settlement among interbank jurisdictions through a universal technological platform.

Unlike the digital renminbi, which mainly focuses on retail payments (although it is also exploring wholesale applications), the mBridge project is more focused on addressing the pain points of high costs, slow speeds, and lack of transparency in interbank (wholesale level) cross-border payments. Through the mBridge platform, the central bank digital currencies of different countries and regions can achieve efficient exchange and settlement, significantly reducing transaction costs.

Hong Kong's deep involvement in the mBridge project indicates that its Digital Money strategy is “dual-track parallel.” On one hand, through the e-CNY pilot, it deepens the interconnection of retail payments with the mainland; on the other hand, through mBridge, it explores next-generation cross-border payment solutions at the wholesale level on a global scale. The two complement each other, jointly consolidating and enhancing Hong Kong's status as an international financial center.

Conclusion

Hong Kong's active exploration in the cross-border pilot of the digital renminbi vividly reflects its role as a “bridgehead” for China’s financial opening. From expanding the range of merchants accepting it, to actively discussing the enhancement of wallet limits and functions, and to planning larger enterprise-level applications and participating in the mBridge project, Hong Kong is fully and multilayeredly embracing the changes brought by Central Bank Digital Currency.

In the future, the market's attention will be focused on the specific outcomes of discussions between the Hong Kong Monetary Authority and the People's Bank of China. The detailed plan for increasing wallet limits, the implementation path for real-name verification, and the timeline for launching new application scenarios will all be key variables determining the pace of development of the digital renminbi in Hong Kong and even on the international stage. As the infrastructure for digital renminbi continues to mature, Hong Kong will undoubtedly continue to play an indispensable role as a pioneer and tester in China's CBDC internationalization strategy, painting an imaginative stroke for the future landscape of global digital finance.