Hong Kong Monetary Authority Releases CBDC Whitepaper, Discusses Feasibility of Retail Application of Digital Hong Kong Dollar (e-HKD)
This Monday, the Hong Kong Monetary Authority (HKMA) released a formal white paper on the "e-HKD" digital Hong Kong dollar, exploring the potential development of Central Bank Digital Currency (CBDC) focusing on the retail aspect. HKMA stated that they will consider factors including technology and policy aspects, and aim to present preliminary ideas by mid-next year.
According to the document, this innovative initiative will strive to achieve two objectives: first, to study the "tools for central bank issuance and redemption of CBDC" and develop them; second, to be used for "commercial bank distribution and circulation of rCBDC (Retail CBDC) or digital currencies supported by CBDC." HKMA will delve into the potential of this framework from a technological and regulatory policy perspective.
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2017 Actions in Hong Kong
In 2017, Hong Kong began its first research project on CBDC called "LionRock" and initiated a seven-month collaboration with the Central Bank of Thailand in early 2020, focusing on exploring the cross-border payment potential of CBDC.
Subsequently, in collaboration with the Central Bank of the United Arab Emirates and the Digital Currency Institute of the People's Bank of China, this project quickly evolved into a bridge across multiple CBDCs in February this year, with the m-CDBC (Multiple CDBC) utilizing distributed ledger technology as the framework for a unified payment network.
On the Other Hand, What Did the HKMA Do?
In June this year, HKMA announced "Fintech 2025," a project focusing on the development of fintech in five aspects, including "leveraging the potential of data infrastructure," "building a talent pool for fintech," "making good use of government policies," "fully promoting bank digitalization," and "deepening central bank digital currency research"; the aforementioned e-Hong Kong Dollar policy will also help the central bank accelerate the adoption of CBDC and cultivate professional capabilities concurrently.
In response, Eddie Yu, Chief Executive of HKMA, stated: "This white paper signifies a significant step forward in the development of the e-Hong Kong Dollar. Whether it is gaining knowledge from research or drawing experience from other projects, it will contribute to the long-term development of the e-Hong Kong Dollar. Furthermore, we look forward to suggestions from the technology and academic fields, as diverse perspectives will make us stronger."