Could Hong Kong Monetary Authority Launching CBDC Help Digital Yuan Go Global?
The Hong Kong Monetary Authority (HKMA), the territory’s de facto central bank, is aiming to launch trials of the e-HKD, its central bank digital currency (CBDC), in the fourth quarter of this year. If successful, the initiative could facilitate the global rollout of the digital yuan, China’s CBDC project which continues its adoption drive across the nation.
The pilot scheme will be accompanied by changes to Hong Kong’s legislation and the development of the territory’s digital infrastructure to support the e-HKD, The South China Morning Post reported.
On September 20, the authority released a position paper, e-HKD: Charting the Next Steps, which sets out the HKMA’s policy stance on the CBDC project and outlines the next steps to be taken.
"In managing the timeline for rolling out e-HKD, the HKMA would pay particular attention to emerging market trends and international developments so that e-HKD can be made available in [a] good time to address market demands and strengthen our competitiveness in the global payment arena," according to the paper.
In the document, the HKMA said that, some of the „projects and tasks in the pipeline” in relation to its CBDC project include:
- establishing access to the e-HKD via an e-wallet app;
- conducting a joint cyber-security project in cooperation with the Bank of Israel and the BISIH Hong Kong Centre;
- performing technical deep dives on privacy and performance;
- exploring delivery versus payment (DvP) settlement of tokenized securities;
- exploring industry engagements on retail CBDC use cases and design choices;
- developing regulations to establish a framework for the issuance and use of the e-HKD;
- and studying the pros and cons of using a CBDC in Hong Kong as the on- and off-ramp instrument for decentralized finance (DeFI).