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The Hong Kong Monetary Authority (HKMA) has launched the second phase of the digital Hong Kong dollar (e-HKD) pilot study with 21 financial institutions working on 11 use cases for the central bank digital currency and tokenized deposits. In light of the broadening scope of the project, the HKMA is renaming it Project e-HKD+.
The new phase of the project will <a data-ct-non-breakable="null" href="https://www.hkma.gov.hk/eng/news-and-media/press-releases/2024/09/20240923-3/" rel="null" target="null" text="null" title="null">have</a> its own sandbox and last about a year.
<h2 id="cbdc-and-tokenization">CBDC and tokenization</h2>
Project e-HKD+ will <a data-ct-non-breakable="null" href="https://www.hkma.gov.hk/media/eng/doc/key-information/press-release/2024/20240923e3a1.pdf" rel="null" target="null" text="null" title="null">focus</a> on three themes: settlement of tokenized assets, programmability and offline payments. Many of the use cases are highly generalized and several of them do not reference the e-HKD at all. For example:
<blockquote>
 “Hang Seng Bank, Aptos Lab and Boston Consulting Group (BCG) will test the commercial value of settling a tokenised fund using digital money on a public blockchain.”
</blockquote>
Nonetheless, the HKMA <a data-ct-non-breakable="null" href="https://www.hkma.gov.hk/eng/news-and-media/press-releases/2024/09/20240923-3/" rel="null" target="null" text="null" title="null">emphasized</a> in a statement that the project will “continue to advance the technology and legal groundwork to support the potential issuance of an e-HKD.” Other use cases to be considered are quite specific:
<blockquote>
 “Visa, ANZ, Fidelity and ChinaAMC will explore near-real time settlement for interbank transfers and cross-border payments, as well as Delivery vs Payment (DvP), through e-HKD and tokenised deposits, facilitating Australia-based corporate investors’ purchases of tokenised fund units offered by asset management companies in Hong Kong.”
</blockquote>
Two programmability use cases involve rewards platforms, including an environmental, social and governance (ESG) reward platform being researched by Singaporean DBS Bank. Bank of Communications (Hong Kong) and China Mobile (Hong Kong) will look at using e-HKD stored on a mobile SIM card to enable e-HKD offline payments and transfers.
Related: <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/hong-kong-project-ensemble-asset-tokenization-cbdc" rel="null" target="null" text="null" title="null">Hong Kong’s Project Ensemble sandbox ready to test asset tokenization</a>
<h3 id="the-hkma-keeps-busy">The HKMA keeps busy</h3>
The digital Hong Kong dollar project <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/hong-kong-includes-central-bank-digital-currency-in-fintech-strategy" rel="null" target="null" text="null" title="null">kicked off in 2021</a>. The HKMA <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/hong-kong-central-bank-cbdc-pilot-phase-2" rel="null" target="null" text="null" title="null">announced the second phase</a> of the e-HKD project in March and accepted applications from potential participants through May.
<figure>
 <img alt="Hong Kong’s e-HKD project expands into tokenization, programmability" name="" src="https://s3.cointelegraph.com/uploads/2024-09/01922067-47f7-7fdb-8e99-619a002dfa3f">
 <figcaption style="text-align: center;">
 Source: <a data-ct-non-breakable="null" href="https://x.com/hkmagovhk/status/1838176243201736967" rel="nofollow noopener" target="_blank" text="null" title="https://x.com/hkmagovhk/status/1838176243201736967">HKMA</a>
 </figcaption>
</figure>
The HKMA announced that it would also establish the e-HKD Industry Forum, where project participants could discuss common issues and working groups could address specific topics. The first working group that will be formed will focus on programmingability.
The HKMA also <a data-ct-non-breakable="null" href="https://www.hkma.gov.hk/media/chi/doc/key-information/guidelines-and-circular/2024/20240920c1.pdf" rel="null" target="null" text="null" title="null">announced</a> that it is accepting applications to participate in its Generative AI sandbox. The sandbox <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/hong-kong-genai-sandbox-fintech" rel="null" target="null" text="null" title="https://cointelegraph.com/news/hong-kong-genai-sandbox-fintech">will operate </a><a data-ct-non-breakable="null" href="https://cointelegraph.com/news/hong-kong-genai-sandbox-fintech" rel="null" target="null" text="null" title="null">in collaboration</a>&nbsp;with the state-run technology company Cyberport. The project will examine AI applications for risk management, anti-fraud measures and customer experience in finance.
Magazine:&nbsp;<a data-ct-non-breakable="null" href="https://cointelegraph.com/magazine/ripple-visa-hong-kong-cbdc-pilot-huobi-token-allegations-asia-express/" rel="null" target="null" text="null" title="null">Ripple, Visa join HK CBDC pilot, Huobi accusations, GameFi token up 300%: Asia Express</a>
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Hong Kong’s e-HKD project expands into tokenization, programmability

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