Hong Kong Monetary Authority (HKMA) Issues First Whitepaper on CBDC Development
The Hong Kong Monetary Authority (HKMA) has issued the first technical whitepaper addressing its retail central bank digital currency (CBDC). The whitepaper revolves around the features of the e-HKD.
The HKMA has released this whitepaper with the collaboration of the BIS Innovation Hub. HKMA expects to develop its initial view of the CBDC by mid-2022.
HKMA to Launch a CBDC
This recent development places the HKMA closer towards launching a digital Hong Kong dollar. Before publishing this whitepaper, the HKMA had partnered with other central banks to assess the viability of this project.
One of the bodies actively involved in these investigations was the Hong Kong Centre of the BIS Innovation Hub. The two institutions came together to analyze several details about the issuance and distribution of a retail CBDC.
This whitepaper has unique features compared to other similar whitepapers. It addresses the technical infrastructure of the CBDC and how it can deliver a financial solution. The announcement further states that an initial outlook of the e-HKD will be revealed by mid-2020.
The HKMA started its plans for CBDC development earlier this year after launching the “Fintech 2025” roadmap. The main objective of this roadmap was to offer research work on CBDCs.
The Chief Executive of HKMA, Eddie Yue, commented on the publication of this whitepaper stating, “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.”
Thailand and Hong Kong Partner for CBDC Project
In 2020, the central banks of Hong Kong and Thailand revealed plans to launch a joint CBDC. The project, which was named “Inthanon-LionRock” would boost payment efficiency between the two countries.
However, at the time, the HKMA did not show any interest in a CBDC development, and instead, it stated that its current payment system was highly efficient. Hence, the country did not need a CBDC to settle financial transactions.
On the other hand, the HKMA identified existing challenges with cross-border payments, which could only be solved through the development of a digital currency.
The HKMA did not issue any precise timeframe regarding the CBDC development and when it would be available for transactions. However, the authority has stated that it would continue working with the joint project with Thailand and even stated that more countries would be added to make cross-border transactions more efficient.
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