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Hong Kong Monetary Authority (HKMA)
BusinessBanking & Finance

HKMA says Hong Kong digital currency pilot points to ‘tremendous impact’ on banking, financial services

  • E-HKD ‘will have a tremendous impact on the banking and financial’ services sector, HKMA deputy CEO Howard Lee says
  • Pilot provided an ‘initial picture’ of the benefits of a central bank digital currency ecosystem: HSBC Hong Kong CEO

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Tourists at The Peak in Hong Kong. A second phase trial will delve deeper into the e-HKD technology, its business model and legislation, the HKMA’s deputy CEO says. Photo: Edmond So
Mia Castagnone

The e-HKD, Hong Kong’s central bank digital currency (CBDC), could help to settle payments quicker and be more cost effective for businesses, a pilot trial has shown.

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As part of this pilot, which began in May, 16 banks and payment companies tested six potential uses of the e-HKD with a small group of clients. These uses included online payments, payments in shops and restaurants, the collection of government payouts, tokenised deposits, tokenised asset settlement and Web3 trading and clearing.

The three areas where the CBDC could add value to Hong Kong’s current payments ecosystem are programmability, tokenisation and instant payment settlements.

The roll-out of the e-HKD “will have a tremendous impact on the banking and financial” services sector, but the Hong Kong Monetary Authority (HKMA), the city’s de facto central bank, is “not yet at the point where a decision can be made to introduce the e-HKD”, Howard Lee, the HKMA’s deputy CEO, said on Monday.

A phase-2 trial will delve deeper into the e-HKD technology, its business model and legislation, Lee added. The HKMA is already looking for banks to partner with for the next trial, which is anticipated to get under way early next year.

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To execute the pilot trial, the HKMA issued a limited amount of the digital currency in a “sandbox”, or a controlled experimental environment, for companies taking part to test its infrastructure, security and other operational issues.
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