Hong Kong launches a pilot program for its own central bank digital currency in a bid to improve the speed and efficiency of payments in the city.
The Hong Kong Monetary Authority (HKMA) has commenced the «e-HKD Pilot Program», according to a statement by Eddie Yue, the central bank’s chief executive.
16 companies have been selected to participate in the first batch of the pilot program for 2023. According to an «SCMP» report, the selected firms include Hong Kong’s three note-issuing lenders: HSBC, Standard Chartered Bank and Bank of China (Hong Kong).
Three-Rail Approach
Hong Kong’s roadmap for central bank digital currencies (CBDC) involves a so-called «three-rail approach». The first rail focuses on laying the technology and legal foundation for CBDC implementation. The second rail focuses on research and pilots while the third rail focuses on the actual launch of the e-HKD.
The current pilot program is a «key component» of the second rail. It will include 14 pilots spanning six major categories including programmable payments, 'dual offline' payments and other new blockchain applications, such as settling Web3 transactions and tokenized assets.
Expert Group
In addition to the pilot, HKMA also plans to form a «CBDC Expert Group» to foster «closer government-industry-academia collaboration». The group will include leading professors from local universities in various fields, such as computer science, business and law.
«The HKMA will work with the Expert Group to study different important issues, such as privacy protection, cybersecurity, and interoperability, and other technical and business aspects surrounding CBDC,» Yue said, adding that the group members do not have any formal advisory role.
«The HKMA has been researching and piloting on CBDC since 2017. We conducted two rounds of market consultation in the past two years. Overall, the respondents are supportive of the e-HKD initiative and believe that e-HKD has the potential to make payments faster and more efficient while supporting the digital economy.»
