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Standard Chartered's Virtual Bank, Mox Will Usher in New Era of Banking for Hong Kong

Mox Bank Limited, or Mox, the new virtual bank in Hong Kong recently launched by Standard Chartered, has now been made available to select customers via invitation in an external pilot. The aim of the pilot is to prepare the state-of-art virtual bank for the public launch scheduled for later this year.

According to the official release, Deniz Güven, CEO of Mox, said: “This external pilot is a critical step for selected external customers to use Mox, share their feedback with us and help us to refine our services. We are excited about this co-creation of Mox with customers, as we seek to make banking easier, simpler and more delightful.”

Standard Chartered’s landmark virtual bank project was finally named Mox earlier last month. The bank was announced with the the stated mission helping everyone in Hong Kong grow – “your money, your world, your possibilities.”

Güven spoke to that effect in the release when he said, “Mox is in the business of trust, and our goal is to win your heart share. We are delighted to begin this journey with our first generation of Mox customers.”

Mox Will Be a GameChanger

Hong Kong’s currency board and de facto central bank, the Hong Kong Monetary Authority (HKMA), introduced the virtual banking license in 2017 for a “new era of smart banking.” Since then, there have been eight licenses granted, one of which included Standard Chartered Digital Solutions Limited – the working title for MOX at the time. , the Virtual Bank by Standard Chartered (official name to be revealed), a joint venture between Standard Chartered Bank, PCCW, HKT, and Ctrip. HKT and parent PCCW are one of the dominant telecommunication companies in the region.

Virtual banking services in Hong Kong are set be a gamechanger and a disruptor for the financial services industry. Virtual banks have been popular in Europe, and the United Kingdom has coined an alternative term for virtual banks, known as the ‘challenger banks’.

The pilot will allow the invited customers of Mox Limited to experience the intial, yet impressive, suite of services which include quick approvals for loans and efficient account openings within a few seconds and with no minimum balance as well as cutting edge security and privacy maintanence.

According to Mox, everything is based on extensive research to identify what truly matters to customers and to solve real world pain points and the impressive list of feature does seem that they have thought it through for their “Generation Mox” customers.

China's Central Bank Says Digital Yuan Will Not Raise Inflation

China’s central bank has been secretive and silent when it comes to the testing of its national digital currency, which has piqued the curiousity of its citizens. A bank representative recently appeared at a state-owned television company responding to such public curiosities and gave an explanation of how the digital yuan would function.

Race to Ramp Up China’s Digital Yuan Progress

The representative confirmed that the digital yuan, commonly recognized as Digital Currency Electronic Payment (DCEP), has had a pilot test conducted. The testing has been carried out in several cities such as Beijing, Chengdu, Xiongan, Shenzhen, and Suzhou, and future testing is intended to take place in the winter Olympics.

The researcher put great emphasis that such current tests do not mean that the DCEP has been officially issued for public use.

The representative further said that this closed test of the national digital currency would not negatively affect the commercial operation of the listed institutions. The spokesperson stated that it would have no adverse effect on the traditional fiat currency (renminbi) system of circulation and issuance. The representative further mentioned that no effect would be caused on the financial market or social economy of China outside of this testing environment.

As a countermeasure against overselling the digital yuan, the bank mentioned that commercial institutions would be required to pay a 100% reserve to the central bank, first. In other words, the national digital currency would act as a kind of stablecoin, with the central bank first exchanging the virtual currencies to relevant operating agencies and various commercial banks. Such agencies will then release the digital currencies for public circulation. It is an organized system that works well to prevent any inflation because the digital yuan being staked to the traditional fiat yuan at a 1:1 ratio.

Concerning technical designs, the central bank has officially completed the top-layer of the design. The digital yuan will soon adopt a two-layer architecture as well as a two-tier delivery system besides that. The central bank also gave an important explanation with regards to connectivity. It revealed that if payment functions for payment platforms and online banking were to go offline because of weak signals, the Digital Currency Electronic Payment incorporates dual offline technology to compensate. Therefore, the digital yuan will be just as efficient as paper yuan. The bank also said that so long as two mobile phones touched with the Digital Currency Electronic Payment wallet incorporated into both, a transfer of payment can be conducted.

The bank says that the national digital currency is not tied to any kind of bank account and is free from the control of the traditional banking system. Unlike other cryptocurrencies, the national digital currency is launched by China’s central bank and backed by the country’s credit. This is similar to the electronic version of the traditional fiat renminbi. However, it remains to see how accurate the technicality of the DCEP would be.

China’s Digital Yuan to Be Operational for Local Government Employees Starting in May

China could be set to introduce its national digital currency in the market by May 2020. The Chinese administration plans to release the central bank digital currencies for its local government employees. It will be a real test to examine the usage of digital currencies among its government workers. However, it will be a pilot test of using the Digital Currency Electronic Payment for government workers’ transportation allowance. The country will also be testing the use of its digital currency electronic payment for paying salaries to its government employees.

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McDonald's, Subway and Starbucks Among the First to Trial China's Digital Yuan

Mcdonalds has been named along with coffee giant Starbucks as one of the 19 retail firms and restaurants that will be first to try out China’s Digital Yuan in the new district of Xiong’An.

On April 22, the Reformation and Development Commission of the Xiong,An district convened to discuss the pilot for China’s Digitial Currency Electronic Payment (DCEP) according to the South China Morning Post.

China has been unswerving in their race for central bank digital currency dominance even in the wake of the COVID-19 disruption which has perhaps also added fuel to the necessity to have a cashless system free of germ filled notes.

The pilot is the next step in China’s DCEP plan and the PBoC and state-owned commercial banks have already begun developing digital wallet applications and designing the digital Yuan.

The report does not give an exact time length to the testing period but noted that the meeting involved representatives from all four of China’s state-owned banks, Tencent, Ant Financial and Huawei. 19 restaraunts will also participate which will include Mcdonalds, Starbucks and Subway.

The official test application also shows that the DCEP test is being rolled out in the cities of Chengdu, Suzhou, Shenzhen.

As reported by Blockchain.News, local government employees in the city of Suzhou will be receiving China’s central bank digital currency, digital currency electronic payment (DCEP) pilot test in May.

The DCEP Top-Level Design

So how will China create its digital currency? First of all, we know that the digital currency will not be running on a blockchain. After a review of the 50 patent applications submitted by the PBoC, it will be powered by a two-tier operating system and will not be fully decentralized.

According to Binance, the central bank DCEP will be backed 1:1 by Renminbi fiat, following a two-tiered structured system involving the central bank, commercial banks, and the retail market. The first layer consists of the PBoC issuing and redeeming China’s digital Yuan via commercial banks. The second layer is responsible for connecting the commercial banks with the retail market. The plan is to replace notes and coins in circulation.

Bank of Russia Delays CBDC Pilot Rollout

The Bank of Russia’s central bank digital currency (CBDC) pilot, which was scheduled to begin on April 1, has been delayed indefinitely due to specific legislation only passing through the first reading in the Federal Assembly’s lower house. The legislation is expected to be enacted by early May, according to a report by the state-owned TASS.

The CBDC pilot was initially set to involve 15 private banks, but the number has since been reduced to 13. Some of the employees from these banks, along with one of the country’s largest insurance companies, Ingosstrakh, will become the test participants for CBDC retail payments.

Bank executives have expressed enthusiasm for the project, with the director of innovations at Sinara Bank, Vitaly Kopysov, stating that “the use of smart contracts should reduce the operational load of banks and make the deals transparent, which not only will reduce the chances of the misuse of government and banks’ funds, but ultimately simplify the control over the existing contracts.”

Although the pilot will involve real operations and limited consumers, the general public will be unable to participate in the first stage. The banks will enter the pilot with selected customers, and the Bank of Russia will determine how to scale the digital ruble further following the first stage.

The CBDC pilot was initially scheduled for 2024, but it was moved to an earlier date as the Russian central bank sought an alternative to the SWIFT payments system amid Western economic sanctions against Russia. The digital ruble aims to provide a secure and transparent payment system that reduces the dependence on foreign payment systems and minimizes the risk of financial crimes.

The Bank of Russia has been working on the development of the digital ruble since 2019, and it aims to provide an efficient payment system that can be used for various transactions. The CBDC will be a legal tender that will function similarly to traditional cash, but it will be digital and operate on a blockchain network.

The delay in the CBDC pilot rollout is expected to be a temporary setback, as the Bank of Russia remains committed to implementing the digital ruble. The CBDC will provide a secure and efficient payment system that will benefit the economy and the financial system as a whole.