Hong Kong To Lay Foundations For A Native Digital Currency

The Hong Kong Monetary Authority (HKMA) released a report on Friday (June 9) stating that it is preparing to start establishing a retail central bank digital currency (CBDC).

Reportedly, the HKMA has been researching the development of a digital Hong Kong dollar, known as ‘e-HKD, since the year 2017.

However, a recent study and feedback obtained from two rounds of market consultation have convinced the authority to initiate the groundwork for potential future implementation of a retail digital currency.

The report said that to explore the implementation and practical applications of a retail CBDC, the HKMA will reportedly commence its activities to establish the necessary foundations, conduct studies, and initiate pilot programs.

Moreover, this move of HKMA aligns with a global trend, as central banks worldwide are increasingly exploring design options and potential use cases for digital versions of their respective sovereign currencies.

According to the report, the Bank of International Settlements has emphasized that it is important to investigate the digitization of financial systems to preserve stability in the dynamic landscape.

“While it appears that e-HKD might not have an imminent role to play in the current retail payment market, we believe prospective use cases for e-HKD can emerge quickly out of the rapid evolution, or even revolution, in the digital economy,” HKMA’s report further said, according to a portal.

Although the exploration of the blockchain solutions for the e-HKD was proposed in HKMA’s study, the regulator in its Friday’s report mentioned that it will be considering ‘various factors’ such as policy objectives to steps taken by other jurisdictions’ and further explore feasible solutions technically.

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