The Hong Kong Monetary Authority (HKMA) has announced the launch of its digital Hong Kong dollar (CBDC) pilot. The launch demonstrates the commitment of the Asian country to adopting the use of digital currencies in its economy.
A central bank digital currency (CBDC) is a digital or virtual currency issued by a central bank and is a legal tender. It has the potential to be a significant innovation in the financial system. CBDCs can reduce the cost of payments, improve financial inclusion, and facilitate central banks’ control over the money supply.
Over 100 countries are considering or have already launched a central bank digital currency (CBDC). These countries represent over 95% of the global GDP. The Bahamas, China, Eastern Caribbean Currency Union (ECCB), Jamaica, Nigeria, Russia, and Uruguay are amongst those that have launched theirs.
The CBDC pilot includes partners such as Alipay Financial Services (HK) Limited, ARTA-Emali HK Limited, Bank of China (Hong Kong) Limited, China Construction Bank (Asia) Corporation Limited, Fubon Bank (Hong Kong) Limited, Ripple Labs, Inc, Giesecke+Devrient, Standard Chartered Bank (Hong Kong) Limited, and Hang Seng Bank Limited.
Others are the Hongkong and Shanghai Banking Corporation Limited, Visa Inc, Industrial and Commercial Bank of China (Asia) Ltd, Mastercard Asia/Pacific Pte. Ltd, The Boston Consulting Group, HKT Payment Limited, ZA Bank Limited.
According to the report, the pilot will be focused on full-fledged payments, programmable payments, offline payments, tokenized deposits, settlement of Web3, transactions, and settlement of tokenized assets.
Speaking about the project, Mr Eddie Yue, the Chief Executive of the HKMA, said despite a full conclusion on when to implement a CBDC for the country, they are pleased to introduce the e-HKD pilot program. It will serve “as a tremendous opportunity for the HKMA to collaborate with the industry in exploring innovative use cases and maximizing our readiness for a potential e-HKD.”
He added that the project will enhance government-industry-academia collaboration in CBDC research aimed at ensuring its relevance and translating the results into business opportunities within the economy.
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