HKMA Launches Phase Two of e-Hong Kong Dollar Program; Invites Industry Proposals
Summary:
The Hong Kong Monetary Authority (HKMA) has initiated the second phase of its central bank digital currency (CBDC) pilot program, e-HKD. Industry stakeholders are encouraged to suggest potential applications for the digital currency, with a deadline of May 17 for submissions. The second phase will continue until mid-2025 to allow time for testing and evaluating the proposed use-cases. This is part of Hong Kong's broader "Fintech 2025" strategy, and applications will be assessed on various innovation, readiness, and compliance parameters. Institutions such as Visa have previously participated, with pilots including tokenization of deposits using blockchain technology.
The Hong Kong Monetary Authority (HKMA) has initiated the second phase of its e-Hong Kong dollar (e-HKD) program, inviting industry stakeholders to devise and propose potential applications for its central bank digital currency (CBDC). On March 14, the central bank declared the launch of the second stage of the e-HKD project, intending to scrutinize the prospects of a digitized Hong Kong dollar. This venture entails delving into the prosperous sectors of the initial phase where an e-HKD presents potential advantages, including programmability, tokenization, and atomic settlement. Besides, the HKMA has committed to investigate fresh applications not incorporated in the previous stage. The central bank has encouraged market entities to register, setting the deadline for submissions on May 17. The HKMA presumes that the second stage of the e-HKD project will run until mid-2025, allowing adequate testing and evaluation time for the proposed applications. The central bank also offered directions for those interested in participating in the program. As per the HKMA, applications will be evaluated on their novelty or distinctiveness compared to existing services, their effect on user experience, readiness for market deployment, regulatory compliance, and how they maximize e-HKD utilization in Hong Kong.
The CBDC initiative was introduced in 2021 as a component of Hong Kong's "Fintech 2025" plan. On June 8, 2021, the central bank released its CBDC strategy -- a part of the broader government effort for stimulating digital finance adoption in Hong King by 2025. The central bank asserts that it has been researching CBDCs since 2017 to comprehend their possible applications. HKMA is currently committing more effort to strengthen "Hong Kong's readiness to issue CBDCs at both wholesale and retail levels."
Notably, institutions such as payment processor Visa have engaged in the e-HKD pilot. On November 1, Visa concluded its digital Hong Kong dollar pilot test in association with local banks HSBC and Hang Seng Bank. The pilot included the tokenization of deposits where currency was minted on a blockchain ledger backed by a balance sheet.
Published At
3/14/2024 2:48:22 PM
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