Hong Kong plans to start testing the e-HKD, a digital version of the Hong Kong dollar, in the year’s remaining months. According to the Hong Kong Monetary Authority (HKMA), as reported by the South China Morning Post, the trials would be made easier by passing new laws and developing the digital infrastructure required to support the project.
Following discussions to obtain input on possible demand, privacy concerns, and other potential challenges around the issuance of a central bank digital currency, the pilot phase has begun (CBDC).
According to Howard Lee, the HKMA’s deputy chief executive, many jurisdictions are already considering the introduction of CBDCs. Participants in the banking authority’s consultations expressed worry about Hong Kong’s perceived lack of progress and the need to catch up with the global trend.
Selected banks, payment providers, and tech companies will participate in the testing. According to Lee, these organizations will look at how their staff and a select group of clientele use digital money. The deputy CEO continued, “the purpose of introducing the e-HKD is to provide more choice for the customer.” Additionally, he highlighted that the action wouldn’t impact Hong Kong’s three note-issuing banks.
According to Colin Pou, executive director for financial infrastructure at the HKMA, the e-HKD launch date would be determined by the Hong Kong Monetary Authority following the trial phase. The regulator initially introduced the CBDC strategy in June 2021 as a component of the Fintech 2025 strategy. The consultations finished in May after a white paper was published in October.
Numerous central banks have been researching digital currencies and developing their own simultaneously. The People’s Bank of China (PBOC) has been conducting e-CNY pilot projects in several locations and only recently announced the expansion of the pilot area in four of those cities to the provincial level.
According to Howard Lee’s announcement earlier this month, Hong Kong has also tested the e-CNY on a modest scale this year. The region’s banking authorities announced last summer that they would connect the digital yuan to its domestic payments infrastructure. Along with the PBOC, the HKMA has been collaborating on cross-border CBDC payments with the central banks of Thailand and the United Arab Emirates.
