Hong Kong will be initiating a study on a digital Hong Kong dollar as part of its plans to “future proof” the city for central bank digital currencies, Hong Kong Monetary Authority Chief Executive Eddie Yue said today.
Fast Facts:
- Yue was outlining the city’s new fintech strategy, which aims to accelerate the adoption of technology by the financial sector, at a Hong Kong Association of Banks fintech seminar entitled The Next Phase of Hong Kong’s Fintech Journey — “Fintech 2025.”
- Hong Kong will be embarking on a study to understand the use cases, benefits and risks of issuing an e-HKD, Yue said. “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,” he said. A working group has been formed at the HKMA and “we hope to offer our initial thought on this complex matter in 12 months’ time”, Yue added.
- “While CBDCs may not see mainstream adoption any time soon, this is something that has the potential to profoundly alter the global payment landscape,” Yue said. “We must work with the industry and international community to ensure that we address both the technical and non-technical issues involved.”
- Hong Kong is partnering with the central banks of China, the United Arab Emirates and Thailand, together with the Bank for International Settlements Innovation Hub in Hong Kong, on a wholesale “Multiple CBDC Bridge” project to study the use of distributed ledger technology to support real-time cross-border payment transactions on a 24/7 basis.
- The city is also working with the BIS Innovation Hub in Hong Kong on a retail CBDC project named Project Aurum, with a focus on possible architectural designs such as hybrid CBDC and private CBDC-backed stablecoins.
- In addition, the city is working with China’s central bank on the e-CNY for cross-border applications.