Hong Kong will allow mainland China's pilot digital currency to be used in shops in the city, the head of its de facto central bank said on Friday, marking a step forward for Beijing's efforts to internationalise the yuan amid rising geopolitical tensions.

The Hong Kong Monetary Authority (HKMA) and the Peoples Bank of China (PBOC) expanded the scope of their cross-border digital yuan pilot to allow the use of e-CNY wallets by Hong Kong residents.

While creating an e-CNY wallet just requires a phone number, upgrading to “higher tier” wallets will require real-name verification.

Hong Kong launched a pilot program enabling digital yuan payments through major Chinese banks, the first example of China’s currency project being deployed beyond the mainland.