2.5 Asia-Pacific Currently, the Asia-Pacific (APAC) region has the largest number of countries that have CBDC pilots launched, including Japan, South Korea, China, Hong Kong, India, Singapore, Thailand, Malaysia and Australia. The APAC region is also involved in several cross-border CBDC projects within the region and across regions, including Project mBridge, Project Dunbar and Project Mariana. China has been at the forefront of CBDC research and development and began research and development in 2014. In 2019, the People’s Bank of China (PBoC) launched a pilot CBDC in the regions of Shenzhen, Suzhou, Xiong’an and Chengdu and has expanded to several other regions since then.34 The Winter Olympics, held in February 2022, saw the e-CNY marketed to foreigners for the first time. During the games, the digital currency was used in transactions worth CNY 2 million (Chinese yuan) (approximately $315,000) a day.35 China is a prime location for a CBDC experiment. First, relative to the West, China boasts a young, tech-savvy population.36 Second, China is unique in that it skipped directly from physical cash to mobile payments in the mid2000s.37 Today, mobile payments are the preferred payment method in China, representing 66% of total transactions in 2021.38 Third, the PBoC and government provided infrastructure and readily supported the use of e-CNY (electronic Chinese yuan). In February 2021, Alipay and Tencent began participating in trials with the aim of offering services through the e-CNY app.39 The PBoC has also paid civil servants in e-CNY, most recently in the city of Changshu.40 Yet, the Chinese CBDC project still has the ability to grow in the amount of user adoption. In June 2021, 71 million transactions using the digital wallet occurred, with a value of CNY 34.5 billion, equivalent to 0.04% of the total CNY in circulation.41,42 By August 2022, the number of transactions had increased to 360 million, with a total value of over CNY 100 billion.43 By the end of December 2022, e-CNY transactions amounted to 0.13% of total currency in circulation.44 Singapore has been another key player in CBDC research. The Monetary Authority of Singapore (MAS), through its Ubin+ initiative, researched CBDC through five phases and included crossborder experimentation with the Bank of Canada and the Bank of England.45 Project Orchid explores domestic retail CBDC use cases in Singapore.46 MAS has been collaborating extensively with other central banks and financial institutions to explore the potential for cross-border CBDC use during Project Dunbar and Mariana. They have conducted successful trials using CBDCs for international transactions, aiming to improve efficiency, reduce costs and enhance financial interoperability. The Bank of Thailand (BOT) began exploring a domestic retail CBDC in 2020, and the pilot tests the deposit, transfer and withdrawal functionalities of the wallet. For cross-border projects, the Hong Kong Monetary Authority, the Bank of Thailand, the People’s Bank of China and the Central Bank of the United Arab Emirates are working together to build a multi-CBDC platform known as mBridge.47 In Australia, the Reserve Bank of Australia (RBA) has undertaken CBDC research starting with a wholesale CBDC proof of concept in 2021, followed by a larger general-purpose CBDC pilot collaborating with industry players to explore various potential use cases and economic benefits in 2023.48 With an efficient domestic payments system and relatively high financial inclusion, research is aimed at understanding how an Australian CBDC might bring efficiency, reduced cost or risk to the Australian economy. The features detailed in Table 5 reflect the unique characteristics and challenges of the APAC region, highlighting the need for tailored CBDC solutions that address specific regional needs while making use of the potential benefits of digital currencies. APAC CBDC considerations TAB L E 5 Consideration Description E-commerce and digital economy APAC has a thriving e-commerce market and a rapidly growing digital economy enhanced by mobile payments.49 CBDCs can provide seamless and secure digital payment infrastructure, promoting the growth of e-commerce and facilitating digital transactions in the region. Financial inclusion APAC countries have large unbanked or underbanked populations, particularly in rural areas. More than 1 billion people within the region still have no access to formal financial services.50 CBDCs can provide accessible digital payment solutions and financial services to those who currently lack access. Global trade and cross-border payments APAC economies have strong interconnectivity and trade relationships. Enhancing cross-border payment efficiency and reducing transaction costs through CBDCs is a specific focus. Remittances The APAC region has a significant number of migrant workers who rely on remittances to support their families.51 CBDCs can offer faster, cheaper and more transparent remittance solutions, addressing the challenges associated with traditional remittance channels. The APAC region has the largest number of countries that have CBDC pilots launched, including Japan, South Korea, China, Hong Kong, India, Singapore, Thailand, Malaysia and Australia. Central Bank Digital Currency Global Interoperability Principles 14
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