March 27, 2024
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Hong Kong’s e-HKD CBDC Pilot Enters Second Phase

The Hong Kong Monetary Authority (HKMA) has announced the second phase of its e-Hong Kong dollar (e-HKD) pilot program, inviting industry players to propose prospective use cases for the central bank’s digital currency (CBDC). This program is a crucial part of Hong Kong’s “Fintech 2025” plan, which seeks to accelerate the region’s adoption of digital finance.

Diving Deeper into e-HKD’s Potential

The second phase, which begins March 14, 2024, will see the HKMA dig deeper into sectors where e-HKD might provide substantial value. These include programmability, tokenization, and atomic settlement, which were investigated during the early phase. In addition, the initiative explores wholly novel use cases that have not before been addressed.

The HKMA is accepting applications from market participants until May 17, 2024. The pilot program is scheduled to operate until mid-2025, allowing adequate time for testing and evaluation of potential use cases. The central bank will evaluate applications based on their innovation, influence on user experience, market readiness, regulatory compliance, and ability to increase e-HKD use in Hong Kong.

Building on Existing Research

The e-HKD pilot is the culmination of ongoing research by the HKMA into CBDCs, which began in 2017. This initiative forms part of the broader “Fintech 2025” strategy, aiming to position Hong Kong for the issuance of CBDCs at both wholesale and retail levels. Major players like Visa have already participated in the e-HKD pilot, with successful trials involving the tokenization of deposits on a blockchain platform.

With the launch of phase two, the HKMA is actively seeking industry collaboration to explore the full potential of e-HKD and shape the future of digital finance in Hong Kong.

Image by TravelScape on Freepik

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