Hong Kong is planning to implement a trial run of a digital currency called the e-HKD. It is a virtual coin through which citizens can shop, dine out, and transfer money. According to a statement by the Hong Kong Monetary Authority (HKMA), a total of 16 banks and payment companies have come forward. They will choose client mini-groups to test six possible uses for e-HKD. This is the study of:
● Online payments
● Payments in shops & restaurants
● Collecting government payouts
● Tokenized Deposit
● Tokenized Asset Settlement
● Web3 Trading & Clearing
The CEO of HKMA, Eddie Yue Wai-Man, hosted a ceremony on Thursday evening to declare the commencement of the e-HKD pilot programme at the de facto central bank’s office in Central.
Howard Lee, Deputy CEO of the organization, gave a brief to the media stating that, “The HKMA considers it the right time to explore a digital currency as residents have become more willing to use online banking services in recent years.”
During the pandemic time, three years ago, eight virtual banks were operating in Hong Kong, raising hopes of a digital transition in this market. HSBC, Standard Chartered Bank, and the Bank of China (Hong Kong) will participate in this trial. The three banks are note-issuing lenders.
The strategy of the de facto central bank is to flow the minimum amount of digital money, as this is part of the experiment. They called it a “sandbox,” where companies can participate to test its infrastructure, security, and other operational issues.
The test run “serves as a tremendous opportunity for the HKMA to collaborate with the industry in exploring innovative use cases and maximizing our readiness for a potential e-HKD,” Yue said at the launch ceremony.
HSBC is entering into two projects: e-HKD payments on the campus of the Hong Kong University of Science & Technology (HKUST) and artificial tokenized deposit transactions in collaboration with Visa.
The CEO of HSBC Hong Kong, Luanne Lim, shares a few words about this pilot program: “(It) will help prepare Hong Kong for a new form of money on the horizon and strengthen our competitiveness in the digital economy.”
The results of the HKMA will be out in November, Lee said. However, no confirmation has been released on e-HKD’s full functioning.
The HKMA joins a number of other central banks across the world that have started virtual currency programmes or are thinking about doing so. The Bahamas was the first to launch its digital coin, the Sand Dollar, in October 2020; that’s why they are out while China is conducting several pilot programmes for its digital yuan, the e-CNY.
“Globally, there are about 100 central banks studying digital currency. Hong Kong needs to, as it may need several years to develop a central bank digital currency,” Lee said.
HKMA mentioned this prospect for the first time in June 2021, as a part of Fintech 2025. The authority is planning to make it a financial technology, for which a white paper was issued in October 2021. All concerns and consultations have been approved regarding the privacy and launch of digital coins in May last year.
Over 4.7 million users and 96,000 new retailers in Hong Kong have shown interest in Alipay, WeChat, Tap&Go, and Octopus as digital wallets in 2021. Although the pandemic plays a vital role in stimulating people to shop online, Alipay Financial Services (Hong Kong) is taking part in the e-HKD trial project.
e-HKD is a retail-oriented project supported by the central bank’s digital currency (CBDC). But the HKMA is leading a multinational-level project for ‘mBridge’ with the People’s Bank of China (PBOC), the central banks of Thailand and the United Arab Emirates, and the Bank for International Settlements (BIS). The Innovation Hub Hong Kong Center will investigate how it might be used to settle international payments.
PBOC on mbridge stated that the trial is running from August 15 to September 23. In that time, 20 commercial banks transferred 150 yuan (US$ 22 million) across 160 payments, and from it, 80 million yuan of digital fiat was issued on the platform.
- Published By Team Hongkong Journalist