HKMA Eddie Yue Discusses Hong Kong’s Role in Shaping the Future of CBDCs

HKMA Eddie Yue Discusses Hong Kong’s Role in Shaping the Future of CBDCs

by April 15, 2024

Eddie Yue, Chief Executive of the Hong Kong Monetary Authority (HKMA), shared his thoughts on the future of money and payment systems in an increasingly digital world at the International Conference on Central Bank Digital Currencies and Payment Systems.

The monetary authority has been researching central bank digital currencies (CBDCs) in Hong Kong since 2017 and is working on one of the most advanced explorations of a multi-CBDC platform globally.

Eddie YueHong Kong CBDCs

Eddie Yue

Eddie discussed the potential of tokenisation, a process of transforming the rights to an asset into a digital token, to enable the interweaving of money and assets in both the physical and digital world.

“The HKMA has been working with the industry to explore potential applications for an e-HKD, a new form of digital money, and has launched the second phase of the e-HKD Pilot Programme,”

said Eddie.

The monetary authority envisions a future monetary system where public and private money coexists, with CBDCs as a trusted monetary anchor. To achieve this, the Hong Kong Monetary Authority is developing a digital money framework comprising three key components: retail CBDCs, regulated stablecoins, and tokenised deposits.

While a retail CBDC may represent a more advanced version of cash, the HKMA will continue to consider its introduction using a use-case-driven approach.

The monetary authority has also recently completed a consultation on a legislative proposal to implement a regulatory regime for stablecoin issuers, ensuring adequate protection for stablecoin holders.

The HKMA is also exploring the potential of a wholesale CBDC, which could underpin different forms of digital money and support the growing tokenisation market.

The development of a wholesale CBDC sandbox, Project Ensemble, aims to explore the technical viability of interbank settlement functionality between institutions with their ledgers and systems for tokenised assets.

Eddie emphasised the importance of public-private collaboration among the Government, industry, and academia in navigating these projects’ implications for legal, regulatory, policy, financial stability, privacy, and cybersecurity issues.

Featured image credit: Edited from Freepik