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China has unveiled an industrial park in the Luohu district of Shenzhen, solely dedicated to the development of the digital yuan ecosystem. This monumental move comes as the central bank digital currency (CBDC), also termed e-CNY, witnesses continuous evolution.
Shenzhen Park Boosts Digital Yuan Growth
Adjacent to Hong Kong, this novel facility commenced its journey with nine initial residents. Reports highlight that the district government has released ten initiatives. These initiatives are specifically designed to amplify the growth of the digital yuan ecosystem. They encompass diverse sectors such as payment solutions, the promotion of digital yuan, smart contracts, and the creation of hard wallets.
Moreover, there are lucrative incentives on offer since residents have the potential to enjoy up to three years of rent-free accommodation. On the financial front, commercial banks can obtain as much as 20 million yuan ($2.7 million) for setting up their operations in this park. Startups, on the other hand, could be eligible for 50 million yuan ($6.9 million). Consequently, the total governmental support for this venture is pegged at 100 million yuan ($13.7 million). Additionally, loans with favorable terms are available for interested parties.
Among the pioneers to set up their bases in the park are prominent names like Hengbao, Wuhan Tianyu Information, and Lakala Payment. Hengbao and Tianyu, besides other operations, are recognized for their payment cards. Lakala, however, is renowned as a payment processor and also boasts a partnership with Visa.
Zeng Zhaoxiang, the executive deputy director of Wuhan Tianyu Information, shared his optimism with the China Daily, emphasizing the aspiration to harness synergies in the industrial chain. Such collaborations, he believes, will collectively elevate the park’s development trajectory.
Hong Kong, UAE Boost Fintech Collaboration
However, the efforts to popularize the digital yuan don’t just stop at Shenzhen. The e-CNY is currently undergoing rigorous pilot testing in twenty-six cities. Significantly, the digital currency has already found acceptance among 5.6 million merchants. With the support and advancements ushered by the government, this figure is poised for a steady upswing.
Additionally, the digital yuan app has been enhanced with a feature, enabling tourists to utilize their Visa and Mastercard for wallet top-ups. Yet, even with 261 million digital yuan wallets established by 2022, its broader acceptance remains somewhat tepid.
Beyond China’s borders, the focus on CBDCs remains robust. Hong Kong and the UAE have embarked on an ambitious journey, intensifying their financial ties. They’re jointly exploring fintech opportunities, with a pronounced emphasis on CBDCs. Their primary objective is to refine cross-border trade, revamp payment systems, and streamline virtual asset regulations. Hence, the central banks of both regions have initiated a joint working committee. This committee tasks stakeholders from their respective banking sectors with advancing these collaborative measures.
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