The Hong Kong Monetary Authority (HKMA) has teamed up with local banks and the R3 consortium to explore the creation of a central bank digital currency.
Working with three note-issuing banks and the Hong Kong Interbank Clearing Limited, HKAM says that it is in the first phase of a project researching the feasibility of a central bank digital currency using distributed ledger technology.
The partners are investigating the use of such a currency in performing domestic inter-bank payments, inter-corporate payment in the wholesale market and delivery versus payment debt securities settlement.
The first phase of the work is expected to be completed in the fourth quarter of this year, after which HKMA will look into taking the matter further.
The watchdog is already working on the use of distributed ledger technology for trade finance, carrying out a proof-of-concept with Bank of China, Bank of East Asia, Hang Seng Bank, HSBC, Standard Chartered Bank and Deloitte.