Hong Kong's digital currency: the beginning of the end for cash?
- With the growing interest in digital currency for local retail purposes, the Hong Kong Monetary Authority (HKMA) is studying the feasibility of an e-Hong Kong dollar, which would be an electronic version of a physical banknote
- What is the purpose of this partial transition to digital currency?
Digital currency is becoming increasingly popular, and thanks to Covid-19, people are using touchless payments, online shopping, and e-commerce platforms more than ever. With the growing interest in digital currency for local retail purposes, the Hong Kong Monetary Authority (HKMA) is studying the feasibility of an e-Hong Kong dollar, which would be an electronic version of a physical banknote.
China’s sovereign digital currency, e-CNY, is scheduled to launch in 2022, and is designed to partially replace physical cash notes and bills in the retail sector domestically. What is the purpose of this partial transition to digital currency?
Henry Zheng, Partner of FinTech and Innovation & APAC FinTech and Innovation COO at EY, answers with a rhetorical question: “with the whole world going digital, why not have a digital currency?” Bénédicte Nolens, Head of the Hong Kong Centre at BIS Innovation Hub, adds her perspective that retail CBDC that is nationally influenced is meant to support financial inclusion.
In terms of the effects that the introduction of digital currency might have on current monetary systems and policies in Hong Kong, Carie Li, Economist at OCBC Wing Hang Bank, states the “launch of an e-Hong Kong dollar will not have any implication on link exchange rate systems, because it would just be an electronic version of cash and would be issued with the same mechanism.”
