China expands digital-yuan push to Singapore and Asean trade routes

In an effort to further promote the internationalisation of China’s currency, Beijing has pledged to expand the use of its digital yuan, including by establishing a cross-border payment pilot with Singapore.

The measures, announced by the People’s Bank of China on Wednesday, are tied to a broader financial support plan for China’s New International Land-Sea Trade Corridor – a trade and logistics network, launched in 2017, that links landlocked cities in western China with hundreds of global ports via rail, road and shipping connections.

The PBOC, along with seven other government ministries and agencies, vowed to support the “exploration of pilot programmes for cross-border digital yuan payments between the [Chinese] mainland and Singapore” and promote “cross-border payments using central bank digital currencies” with places such as Thailand, Hong Kong, the United Arab Emirates and Saudi Arabia.

Hong Kong is the largest offshore yuan market.

First piloted in 2020, the e-CNY is the digital form of China’s sovereign currency, and Beijing has accelerated efforts to encourage its use in cross-border payments and overseas markets. The digital token offers an alternative amid an international frenzy over stablecoins, and it aims to erode the dominance of the US dollar in the global financial architecture.

The latest developments also come as China is looking to diversify exchanges with other countries amid its trade war with the United States.

South China Morning Post