Hong Kong Continues Exploration of Digital Currency with Phase 2 of e-HKD

Hong Kong Continues Exploration of Digital Currency with Phase 2 of e-HKD

by March 18, 2024

The Hong Kong Monetary Authority (HKMA) has embarked on phase 2 of its e-HKD pilot programme, aiming to explore and expand upon the innovative applications of digital currency in Hong Kong.

This move follows the successful completion of the programme’s first phase in October 2023, which examined domestic retail applications including programmable payments, settlement of tokenised assets, and offline payments.

HKMA had published a report on the first phase which included key findings, learnings, and an assessment of the 14 pilots conducted by 16 participating firms.

The 16 participating firms include Alipay HK, ARTA-Emali HK, Bank of China (Hong Kong), China Construction Bank, Fubon Bank (Hong Kong), Ripple Labs, Giesecke+Devrient, Standard Chartered, Hang Seng Bank, HSBC, Visa, Industrial and Commercial Bank of China, Mastercard, Boston Consulting Group, HKT Payment, and ZA Bank.

Moving forward, Phase 2 will focus on refining the promising pilots from the initial phase, particularly those involving programmability, tokenisation, atomic settlement, and will introduce investigation into new use cases that were previously unexplored.

To facilitate this, an upgraded e-HKD sandbox will be utilised, building on the foundation of the wholesale central bank digital currency (wCBDC) sandbox under Project Ensemble.

This will accelerate the prototyping, development, and testing of new use cases, while also examining interoperability and interbank settlement processes between e-HKD and other tokenised currencies.

In conjunction with the pilot programme, the HKMA continues its extensive research into the potential roles and impacts of central bank digital currencies (CBDCs) within the future digital monetary landscape.

Through collaborations with the CBDC Expert Group, in-depth studies on programmability, privacy, and interoperability are underway.

Insights from these studies, combined with findings from both phases of the e-HKD pilot programme, will guide the HKMA’s considerations regarding the potential implementation of e-HKD.

The HKMA has called on organisations interested in joining Phase 2 of the e-HKD pilot programme to submit their applications by 17 May 2024.

More information about the application process is available on the HKMA website, as the authority seeks to engage both local and international stakeholders in the ongoing development of CBDCs.


Featured image credit: Edited from Unsplash