The central banks of Hong Kong and the United Arab Emirates have announced plans to strengthen their financial cooperation—and work together to regulate virtual assets.
A bilateral meeting was held in Abu Dhabi, with financial infrastructure and cross-border trade settlements also on the agenda.
Last month, the UAE’s Securities and Commodities Authority began allowing crypto firms to apply for operating licenses—and Hex Trust, a crypto custodian based in Hong Kong, was one of the first recipients. this.
Fintech and Web3 platform Finoverse, headquartered in Hong Kong but recently opened an office in Dubai, recently said The National that it hopes the two regions to cooperate more closely with blockchain technology.
Their focus on cross-border trade settlements could open up the possibility of using digital currencies in the central bank—speeding up transfers and reducing costs, as well as a reliance on the US dollar.
Back in March, the Central Bank of the UAE announced that it plans to raise its ambitions for a CBDC — with the first phase of a strategy to launch a digital dirham scheduled to be completed this time around. next year.
The UAE and Hong Kong are already working together to create mBridge, a new blockchain that supports multiple CBDCs and aims “to deal with the limitations of today’s cross-border payment systems.” Real corporate transactions are conducted as part of a trial.
Things are a bit more complicated in Hong Kong. While the region is meant to have a high degree of autonomy until 2047, critics have accused China of increasingly installing pro-Beijing candidates in positions of power.
China’s desire to launch a CBDC is at an advanced stage, with the digital yuan continuing to be rolled out to the masses at a rapid pace. Last month, it was announced that civil servants in the city of Changshu would be paid entirely using e-CNY—a significant milestone considering that it is home to 1.7 million people.
However, it doesn’t look like the digital yuan is coming to Hong Kong anytime soon. Earlier this month, its monetary authority announced that it had launched a pilot for an electronic form of the Hong Kong dollar. Sixteen companies will be involved in exploring use cases such as full payments, tokenized deposits and the settlement of Web3 transactions and tokenized assets.
