Pilot

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Phase two of the Hong Kong Monetary Authority’s pilot program for the e-Hong Kong dollar (e-HKD) has begun, with the HKMA encouraging industry participants to suggest potential use cases for its central bank digital currency (CBDC). With the newly introduced regulatory sandbox, wholesale CBDCs and tokenization will be easier to test. Industry participants can submit proposals on potential uses of a digital Hong Kong dollar until May 17. The second phase has begun 
On March 14, the HKMA announced the second phase of the e-HKD pilot to explore the possibilities of a digital Hong Kong dollar. As part of this phase, an e-HKD will be explored in depth in key areas where it can add value. Among these are programmability, tokenization, and atomic settlement. HKMA also stated that it will examine new use cases that were not covered in the <a href="https://news.todayq.com/hong-kongs-e-hkd-cbdc-pilot-program-advances-to-phase-2/" target="_blank" rel="noreferrer noopener">previous phase</a>. 
The central bank will continue testing from the first phase and explore new applications of a digital version of the Hong Kong dollar. In Phase 1 of the pilot program, the HKMA tested the use of CBDCs in domestic retail payments, offline payments, and tokenized asset settlement.&nbsp; 
In an effort to support Phase 2 of the e-HKD pilot, the HKMA reportedly started a regulatory <a href="https://news.todayq.com/hong-kong-hopes-to-lead-with-the-sandbox-launch/" target="_blank" rel="noreferrer noopener">sandbox</a> project earlier this month to test CBDCs for wholesale use and tokenization. Some regulators believe trusty central bank money can compete with payments-focused private crypto such as stablecoins – and Hong Kong is among more than 100 jurisdictions exploring CBDC issuance. The initial launch of the CBDC project 
One of the main reasons as to why CBDC project got launched in 2021 was Hong Kong’s “Fintech 2025” strategy. Central bank published on June 8, 2021, it plans concerning CBDC. It has also been highlighted that this is a part of the wider government efforts for promoting use of digital finance by 2025 within the special administrative region. 
As per central banking institution, its research on CBDCs started way back in 2017 to explore how they might apply. To this end, <a href="https://news.todayq.com/hong-kongs-hkma-alerts-citizens-as-crypto-firms-pose-themselves-as-banks/" target="_blank" rel="noreferrer noopener">HKMA</a> says it is stepping up its work to enhance Hong Kong’s readiness to issue CBDCs at both wholesale and retail levels. 
For instance, payment processor Visa participated in e-HKD pilot. On Nov. 1st Visa completed the pilot test with local banks HSBC and Hang Seng Bank for digitalized Hong Kong dollar. The pilot saw deposits tokenized such that money creation happened on blockchain ledger supported by balance sheet.

Hong Kong begins phase two of e-HKD Pilot

Todayq News

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