HKMA Advances to Phase 2 of e-Hong Kong Dollar (e-HKD) Pilot Program after Successful First Phase
Summary:
The Hong Kong Monetary Authority (HKMA) is progressing to the second phase of the e-Hong Kong dollar (e-HKD) pilot program after successfully concluding the first phase. The next stage promises to delve deeper into the use cases of CBDC that showed potential in phase 1. They're also considering utilizing distributed ledger technology due to its scalability and interoperability. The Hong Kong CBDC program, currently in its industry pilot stage, follows a three-layered approach including foundational layer development, iterative enhancements, and a full launch. HKMA hinted that international collaborations are also underway for quicker and more transparent cross-border payments.
The Hong Kong Monetary Authority (HKMA) is steadfastly preparing for the next step in the e-Hong Kong dollar (e-HKD) pilot program, following the thriving wrap-up of the first phase of its proposed central bank digital currency (CBDC). Initiated in November 2022, the e-HKD pilot program represented HKMA's assessment of the practicability of a proprietary CBDC, as a part of its "Fintech 2025" mission. Phase 1 focused on exploring six major avenues for the e-HKD, encompassing comprehensive payments, programmable payments, offline transactions, tokenized deposits, settlement of Web3 transactions, and tokenized asset settlements.
The HKMA, while providing specifics of the Phase 1 achievement, accentuated programmability, tokenization, and atomic settlement as the crucial aspects where the proposed CBDC could add value for both consumers and commercial entities.
The subsequent phase of the e-HKD pilot program is set to benefit from the successful execution of Phase 1, introducing new applications for the digital currency. Promising use scenarios unveiled in the initial phase would be further scrutinized by HKMA. It also appears that a design based on distributed ledger technology (DLT) is of preference given its interoperability and scalability potentials. The design layout for Hong Kong's CBDC program factors in a three-pronged approach, including foundational infrastructure development, commercial pilots, consecutive improvements, and ultimate rollout. The program's current trial phase enlists the support of both public and private organizations to validate potential business value. HKMA also expressed its dedication to continue tackling initial initiatives, such as establishing the legal and technical underpinnings for the e-HKD.
Furthermore, global collaboration for CBDC development is witnessed as a host of commercial and central banks have partnered under Project mBridge, which seeks to investigate strategies for efficient, cost-effective, and transparent overseas transactions. On September 25, HKMA's chief, Eddie Yue, unveiled plans for the expansion and commercialization of mBridge, enthusiastically welcoming new banking members from China, Hong Kong, Thailand, and the UAE. Yue also expressed optimism regarding more central banking entities joining the platform and spoke of imminent plans to launch what they envision as a minimum viable product, which would facilitate the eventual commercial rollout of mBridge.
Published At
10/31/2023 6:12:24 AM
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