The Digital Currency Institute of the People's Bank of China (PBOC), as well as the Central Bank of the United Arab Emirates (CBUAE), joined the Multiple CBDC (m-CBDC) Bridge, a central bank digital currency project for cross-border foreign currency payments, initiated by the Hong Kong Monetary Authority (HKMA) and the Bank of Thailand (BoT).

Supported by the Bank for International Settlements (BIS) Innovation Hub Centre in the Hong Kong Special Administrative Region (HKSAR), the cross-border payments project aims to develop a proof-of-concept prototype to facilitate real-time cross-border foreign exchange payments on distributed ledger technology.

Meanwhile, it will foster a conducive environment for more central banks in Asia and other regions to jointly study to improve the cross-border payment capabilities of financial infrastructure to solve the problems of low efficiency, high cost, and low transparency in cross-border payments.

The participating central banks will evaluate the m-CBDC Bridge project's feasibility for cross-border fund transfers, international trade settlement, and capital market transactions in their own jurisdictions.

For years, China has been a relatively cashless society, with millions of mobile payment users paying with either Tencent's WeChat Pay or Alibaba's Alipay every day. Per the People's Bank of China (PBOC), banks in China handled non-cash mobile payments of $49.27 trillion in 2019, more than 25 percent from the previous year.

The central bank issued China's digital currency, which makes it totally different from cryptocurrencies like bitcoin and Facebook Inc's Libra. Since all currencies issued by the central bank are debt, the nation will use its power to guarantee the digital currency's repayment for credibility.

Last October, the PBOC included the digital yuan in the latest version of the proposed banking law, providing more legal ground for regulating its electronic currency in the testing stage.

The proposed law recognizes the national currency, the renminbi, in physical and digital form, with particular clarity on the digital yuan to be the one and only official yuan-pegged token in China to "prevent the risk of virtual currency." The draft also clarifies the digital currency as legal tender, laying down grounds for its wider issuance.

By launching booking channels for digital yuan at the beginning of February, China's capital city of Beijing has become the third digital currency pilot city after Shenzhen and Suzhou, dispensing 10 million yuan ($1.55 million) via online "red packets" to residents in Beijing to shore up local consumption and encourage migrant workers to stay put in the city for the Spring Festival holiday.