The Hong Kong Monetary Authority (HKMA) today published a white paper examining the potential of retail-focused central bank digital currency (CBDC), Hong Kong Digital Dollar (e-HKD).
According to the document, the CMA will seek to understand “potential architectures and design options” in terms of technical and regulatory policy, with ambitions to create a two-tier system – the first designed for the “central bank to issue and buy out the central bank. Bank currencies”, and the other was devoted to retail for “commercial banks”. for the distribution and circulation of electronic money supported by the Central Bank of Central Banks or rCBDC ”.
Hong Kong began exploring CBDCs in 2017 with Project LionRock, and in early 2020 began a seven-month partnership with the Bank of Thailand to explore “the potential of wholesale CBDCs for cross-border payments.”
The initiative quickly became a multi-digital bridge between central banks in February 2021 following the establishment of the UAE Central Bank and the Digital Currency Institute of the People’s Bank of China. This “m-CDBC” will focus on the use of distributed accounting technology to provide a pilot model for a unified payment network.
In June this year, HKMA announced Fintech 2025, a financial technology initiative that focused on five innovation areas, including support for central banks in CBDC accreditation, the development of a skilled workforce, in addition to the initiative launched today. HKMA CEO Eddie Yue said:
The White Paper represents the first step in our e-HKD technical study. The knowledge from this study, combined with the experience we have gained from other CBDC projects, will help to provide further exploration and discussion of the technical design of e-HKD.
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“We also look forward to comments and suggestions from academia and industry to enrich our views,” Yu added.
Despite a complete ban on all cryptocurrency-related activities with the exception of Hong Kong, the People’s Republic of China has been consistently ambitious in its search for a central bank’s digital currency, establishing itself as a prominent leader in the fast-growing global market.