Key Takeaways:
- The HKMA launches Phase 2 of the e-HKD Pilot Program, continuing its exploration of innovative e-HKD use cases
- e-HKD Phase 1, focused on domestic retail applications like programmable payments and tokenized asset settlement
The Hong Kong Monetary Authority (HKMA) has embarked on the second phase of its pilot program to explore the innovative potential of a central bank digital currency (CBDC) for public use.
This initiative comes five months after the completion of the first trial run, with the HKMA aiming to delve deeper into areas such as programmability, tokenization, and atomic settlement for an electronic Hong Kong dollar (e-HKD).
In a press release on Thursday, the HKMA highlighted its plans to build upon the success and insights gained from the initial phase, focusing on select pilots to further explore the possibilities of e-HKD.
The first phase of the pilot primarily investigated domestic retail use cases, including programmable payments, settlement of tokenized assets, and offline payments.
Additionally, the HKMA recently initiated a regulatory sandbox project to test CBDCs for wholesale use and tokenization, which will support Phase 2 of the e-HKD pilot
. Hong Kong joins over 100 jurisdictions worldwide in exploring the issuance and potential applications of CBDCs, with regulators recognizing the potential of central bank money to compete with private cryptocurrencies such as stablecoins.
To participate in the pilot, interested parties must adhere to guidelines provided by the HKMA. Applications will be evaluated based on criteria such as innovation, impact on consumer experience, readiness for market testing, compliance with regulations, and the maximization of e-HKD usage in Hong Kong.
The HKMA has been conducting research on CBDCs since 2017 to understand their applications and is increasing efforts to enhance Hong Kong’s readiness for CBDC issuance.
Several prominent institutions, including payment processor Visa, have participated in the e-HKD pilot. Visa recently completed a digital Hong Kong dollar pilot test with local banks HSBC and Hang Seng Bank, involving the tokenization of deposits backed by a blockchain ledger.
This collaborative effort signifies the growing interest and investment in exploring the possibilities of CBDCs in the financial sector.
