The Hong Kong Monetary Authority (HKMA) is set to initiate the second phase of its digital Hong Kong Dollar project next year, focusing on the exploration of innovative applications and reinforcing collaborations across the financial industry.
During the Fintech Foresight Seminar held by Hong Kong 01, HKMA Chief Fintech Officer Nelson Chow stated that Hong Kong’s central bank digital currency (CBDC) has completed its first phase and will proceed to the next phase in 2024.
Digital Hong Kong Dollar’s Second Phase
Building on the groundwork laid in the e-HKD Pilot Program’s initial phase, the HKMA’s forthcoming step will delve into real-world applications of the digital Hong Kong Dollar, seeking to integrate it within the broader economic framework.
Like the United Kingdom or other developed countries and regions, Hong Kong is still in the phase of testing CBDC. Chow said, “Hong Kong is definitely not falling behind; it is among the leading group conducting research. The e-HKD Pilot Program is of research value to other central banks as well.”
This announced second phase will prioritize the assessment of the digital currency’s potential impact on everyday transactions, while also leveraging partnerships with banking institutions and fintech companies to expand its practical use and acceptance.
According to Chow, e-HKD can add significant value to the retail payment ecosystem, including programmability, tokenization, and instant settlement, to facilitate faster, more cost-effective, and inclusive transactions, which is beneficial for new economic and financial activities, such as web3 transactions.
HKMA’s Cautious Path to e-HKD
Chow added that the pilot program consists of predefined small-scale tests. Before a large-scale implementation can take place, further research is required to determine whether the associated benefits exist.
It was also reiterated by Chow that even the second phase is planned, there is currently no final decision on when e-HKD will be launched. The outcome of the test phases and the development needs of both local and international markets will be considered for the ultimate decision.
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