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Monday, Jun 14, 2021

Hong Kong to explore potential for digital HK dollar

Hong Kong to explore potential for digital HK dollar

The Hong Kong Monetary Authority (HKMA) is launching “a comprehensive study” that will explore the use cases, benefits and risks of developing a digital Hong Kong dollar as a central bank digital currency (CBDC).
The HKMA unveiled the plans at the launch of its Fintech 2025 strategy and explained that the authority would also continue to collaborate with the People’s Bank of China (PBOC) on “the technical testing of e-CNY [digital RMB] in Hong Kong with a view to providing a convenient means of cross-boundary payments for both domestic and mainland residents”.

The study will take place alongside the HKMA’s research into wholesale CBDCs as a means of “addressing the long-standing pain points in cross-border payments” and into retail CBDCs, focusing on “the technical aspect of issuing r-CBDCs and the possible architectural designs”.

“The HKMA will soon begin a comprehensive study on e-HKD to understand its use cases, benefits and related risks,” HKMA CEO Eddie Yue said at the Fintech 2025 event.

“This is to increase our technical readiness so that we are prepared for all kinds of circumstances in the future, including the potential for Hong Kong to issue e-HKD.

“We have already established an internal cross-departmental working group within the HKMA to study the relevant technical, policy and legal issues, and we hope to offer our initial thoughts on this complex matter in 12 months’ time.”

The HKMA is exploring the use of CBDCs for cross-border payments as part of the Bridge project unveiled by the PBOC in February.
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