The Hong Kong Monetary Authority has committed to rolling out a retail central bank digital currency (CBDC) after a positive response to consultations scoping out the technical and policy perspectives.
As part of its 'Fintech 2025' strategy to future-proof Hong Kong in terms of CBDC readiness, the HKMA has examined the prospect of issuing an e-HKD via two rounds of market consultation, one on high-level technical design and one on key policy and design issues.
In total, 75 responses were received during the consultation. Overall, respondents were found to be supportive of the initiative and believe that e-HKD has the potential to make payments more effective in a future digital economy.
At the same time, respondents also pointed out the need to further examine issues such as privacy protection, legal considerations, and use cases.
Taking into account the findings, the HKMA has outlined a three-rail approach, which will pave the way for possible implementation of e-HKD in the future.
Rnunning in parallel, the first two rails will lay the technology and legal foundations, and take a deep dive into use cases as well as application, implementation, and design issues. The HKMA says it will also conduct a series of pilots in close collaboration with various stakeholders to gain actual experience.
Rail three will set the timeline for lunching e-HKD, consolidating the outcomes of the earlier preparatory wok.
Eddie Yue, chief executive of the HKMA, comments: “The two rounds of market consultation have registered widespread support for the e-HKD initiative. We welcome the positive feedback received and agreed with the respondents the need to take a deep dive into issues such as privacy protection and use cases. As Hong Kong’s central banking institution, we will ensure that Hong Kong continues to play a leading role in the global financial landscape by getting ourselves ready as best we can in terms of CBDC and by providing the right soil for growing innovative ideas.”