Key Points:
Despite the fact that the HKMA has been investigating the development of a digital version of the Hong Kong dollar since at least 2017, a recent study and comments from two rounds of market consultation have convinced the HKMA that it is necessary to at least begin paving the way for possible future implementation of a retail CBDC.
“The HKMA will therefore start work to lay the foundations for, and conduct in-depth studies and pilots on, the implementation and application of rCBDC. In doing so, due regard will be paid to maintaining a good level of flexibility so that the foundations laid and the components developed can be made as forward-compatible as possible to accommodate variations in future scenarios, and can be implemented reasonably swiftly. In gist, the HKMA would adopt a three-rail approach in preparing for any possible implementation of e HKD in the future, as depicted in the following diagram,” the report said.
The HKMA earlier announced its pilot program for central bank digital currency (CBDC) for the e-HKD. Sixteen banks and payment companies will work together on a dozen use cases.
The central bank detailed its three-pronged plan to build a CBDC in September 2022, but it has yet to determine whether to continue. The first component was the legal underpinning and technological infrastructure for its CBDC’s wholesale layer. The trial launch indicates that the layer’s design is complete, and it is expected to take two to three years to build. The other components include the present pilot phase, followed by a possible implementation strategy.
The pilots feature the majority of Hong Kong’s leading banks, with HSBC and Hang Seng Bank each participating in two. It also includes companies like Alipay, Ripple, Gieseck+Devrient, Visa, and Mastercard.
Central banks around the world are increasingly investigating design options and applications for digital versions of sovereign currencies, with the Bank for International Settlements, which represents monetary authorities, emphasizing the importance of investigating financial system digitalization in order to maintain stability.
“While it appears that e-HKD might not have an imminent role to play in the current retail payment market, we believe prospective use cases for e-HKD can emerge quickly out of the rapid evolution, or even revolution, in the digital economy,” according to the report.
The e-HKD experiment is an important component of Rail 2, which is part of the HKMA’s three-rail plan for the potential deployment of a retail CBDC. The findings and insights from each trial will broaden HKMA’s viewpoint and sharpen its approach to the potential deployment of e-HKD.
The HKMA also plans to establish a CBDC Expert Group, which will bring together experts from local institutions to encourage cooperation between government, business, and academia.
DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
Join us to keep track of news: https://linktr.ee/coincu
Harold
Coincu News
Here are the latest predictions for Dogecoin, Shiba Inu, and ETFswap.
Discover BlockDAG's 100% bonus and $110M presale surge that’s sparking interest among crypto enthusiasts. Also,…
Discover why crypto investors are moving to ETFSwap (ETFS) as $500 million liquidity injection is…
Learn about BlockDAG's $110M presale achievement and the whopping 100% bonus offer, alongside Ethereum's growth…
Thai police corruption exposed as officers extort millions in USDT from a Chinese man under…
SafePal Telegram Wallet allows 950 million users to create compliant crypto-friendly Swiss bank accounts, integrating…
This website uses cookies.