On Monday, the Hong Kong Financial Authority (HKMA) released an official white paper exploring the potential of a retail-focused central financial institution digital forex (CBDC), the digital Hong Kong greenback (e-HKD).
In response to the doc, the HKMA will search to grasp the “potential architectures and design choices” from a technical and regulatory coverage perspective, with the ambition of making a dual-tier system — the primary being designed for a “central financial institution to problem and redeem CBDC,” and the second being retail-centric for “business banks to distribute and flow into both rCBDC or CBDC-backed e-money.”
Hong Kong debuted its investigation into CBDCs in 2017 with Venture LionRock, and in early 2020, it launched into a seven-month collaboration with the Bank of Thailand, prospecting the “potential of wholesale CBDC for cross-border funds.”
The initiative quickly evolved into Multiple CBDC Bridge in February 2021 following the introduction of the Central Financial institution of the United Arab Emirates and the Digital Forex Institute of the Individuals’s Financial institution of China. This “m-CDBC” will purpose to make use of distributed ledger expertise to ship a proof-of-concept mannequin for a unified funds community.
In June of this yr, the HKMA announced Fintech 2025, a monetary expertise initiative centered on 5 areas of innovation, together with providing assist to central banks within the adoption of a CBDC, growing a talented workforce, in addition to the initiative launched at present. HKMA chief government Eddie Yue stated:
“The Whitepaper marks step one of our technical exploration for the e-HKD. The information gained from this analysis, along with the expertise we acquired from different CBDC initiatives, would assist inform additional consideration and deliberation on the technical design of the e-HKD.”
“We additionally sit up for receiving suggestions and strategies from the academia and business to counterpoint our views,” Yue added.
Regardless of issuing a blanket ban on all crypto-related activities alongside Hong Kong, the Individuals’s Republic of China has been constantly bold in its pursuit of a CBDC, establishing itself as a distinguished chief within the burgeoning international market.