The Hong Kong Monetary Authority (HKMA) on Monday released an official report that explores the potential of the retail-focused central bank digital currency (CBDC), the Hong Kong Digital Dollar (e-HKD).
According to the document, the CMA will seek to understand “potential architectures and design options” from a technical and regulatory policy perspective, with the ambition to create a dual-tier system — the first designed for a “central bank to issue and redeem central bank currencies,” and the second retail-centric for “banks.” commercial distribution and circulation of electronic money backed by the Central Bank of Central Banks, or rCBDC.”
Hong Kong began its investigation of central bank digital currencies in 2017 with the LionRock project, and in early 2020, it embarked on a seven-month collaboration with the Bank of Thailand, researching “the possibility of wholesale central bank digital currencies for cross-border payments.”
The initiative quickly evolved into a multi-digital central bank digital currency bridge in February 2021 following the introduction of the UAE Central Bank and the People’s Bank of China’s Digital Currency Institute. This ‘m-CDBC’ will aim to use distributed ledger technology to provide a proof-of-concept model for a unified payments network.
In June of this year, the Capital Markets Authority announced Fintech 2025, a financial technology initiative focusing on five areas of innovation, including providing support to central banks in adopting a digital currency for central banks, and developing a skilled workforce, in addition to the initiative presented today. . HKMA CEO Eddie Yu said:
“The white paper represents the first step in our technical exploration of e-HKD. The knowledge gained from this research, combined with the experience we have gained from other CBDC projects, will help provide further study and deliberation on the technical design of e-HKD.”
Related: Central Bank Digital Currencies Can Cut Cross-Border Remittance Costs in Half: Bank for International Settlements Report
“We also look forward to receiving comments and suggestions from academia and industry to enrich our views,” Yu added.
Despite issuing a blanket ban on all crypto-related activities besides Hong Kong, the People’s Republic of China has been consistently ambitious in its pursuit of CBD, establishing itself as a prominent leader in the burgeoning global market.
