The Hong Kong Monetary Authority (HKMA) has recently introduced Phase 2 of the e-HKD Pilot Program.
The Hong Kong Monetary Authority (HKMA) confirmed the launch of Phase 2 of the e-HKD Pilot Program, with a view to further “exploring innovative use cases for an e-HKD in Hong Kong.”
The HKMA completed Phase 1 of the e-HKD Pilot Program “in October 2023 and had studied domestic retail use cases in various areas such as programmable payments, settlement of tokenised assets, and offline payments.”
Building on the success and experience of Phase 1, the next phase will delve deeper into select pilots from Phase 1 where “an e-HKD could add unique value, namely programmability, tokenization and atomic settlement, as well as explore new use cases that have not been covered in the previous phase.”
An enhanced e-HKD sandbox, “leveraged on the wholesale central bank digital currency (wCBDC) sandbox to be built under Project Ensemble, will support Phase 2 of the e-HKD Pilot Program to accelerate the prototyping, development and testing of use cases by pilot participants, as well as facilitate the study of interoperability and interbank settlement between e-HKD and other forms of tokenized money.”
Research on the e-HKD will continue “to underpin the HKMA’s broader work in exploring the roles central bank digital currencies (CBDCs) could play in a future digital money landscape. The HKMA has been conducting a number of in-depth research projects with the CBDC Expert Group on topics including programmability, privacy and interoperability.”
The outcomes and insights gained from both phases of the e-HKD Pilot Program and the researches by the CBDC Expert Group “will facilitate the HKMA’s study on the possible implementation of an e-HKD.”
The HKMA will also continue to “engage local and international stakeholders regarding the latest development of CBDCs.”
Organizations interested in participating in Phase 2 of the e-HKD Pilot Program should submit their applications “on or before 17 May 2024.”
Further details about the application process can be found on the HKMA website.
CBDC projects have really picked up traction globally with China leading the charge when it comes to the development of so-called central bank digital currencies. While the US Federal Reserve has said it has no clear intentions of moving forward with their version of a potential CBDC, the digital dollar, other major jurisdictions and nations like Russia and India have looked into the feasibility of issuing their own CBDCs.
Even underdeveloped and/or developing nations like Pakistan have examined the benefits and drawbacks of providing a CBDC to local consumers and businesses. Critics of CBDCs say that they could help increase government surveillance and potentially lead to privacy concerns as well for a country’s residents.