The Hong Kong Monetary Authority (HKMA) launched an official white paper on Monday investigating the possibility of the digital Hong Kong dollar (e-HKD), a retail-focused central bank digital currency (CBDC) .
According to the document, the HKMA will look into “potential architectures and design options” from a technical and regulatory policy standpoint, with the goal of creating a two-tier system: one for “central banks to issue and redeem CBDC,” and the other for “commercial banks to distribute and circulate either rCBDC or CBDC-backed e-currencies.”
With Project LionRock, Hong Kong began its inquiry of CBDCs in 2017, and in early 2020, it began a seven-month collaboration with the Bank of Thailand to explore the “potential of wholesale CBDC for cross-border payments.”
Following the launch of the Central Bank of the United Arab Emirates and the People’s Bank of China’s Digital Currency Institute, the effort was renamed Multiple CBDC Bridge in February 2021.
The goal of this “m-CDBC” is to create a proof-of-concept model for a unified payments network using distributed ledger technology.
The HKMA unveiled Fintech 2025 in June of this year, a financial technology project centred on five areas of innovation, including assisting central banks in the adoption of a CBDC, cultivating a qualified workforce, and the program revealed today. Eddie Yue, the HKMA’s chief executive, said:
“The Whitepaper marks the first step of our technical exploration for the e-HKD. The knowledge gained from this research, together with the experience we acquired from other CBDC projects, would help inform further consideration and deliberation on the technical design of the e-HKD.”
“We also expect input and recommendations from academics and industry to help us broaden our perspectives,” Yue added.
Despite placing a blanket prohibition on all crypto-related activity, the People’s Republic of China has remained committed to obtaining a CBDC, establishing itself as a key leader in the expanding worldwide market.