Hong Kong is actively accelerating efforts to give its fiat currency, the Hong Kong Dollar (HKD), a blockchain revamp. The special administrative region (SAR) of China has launched its e-HKD central bank digital currency (CBDC) into the second elaborate phase of trials. Following the footsteps of the Reserve Bank of India, the authorities in Hong Kong are now laying focus on adding multiple layers of usable features to the CBDC to make its utilisation more lucrative for the end users.
With the CBDC initiative entering its second phase, the Hong Kong Monetary Authority (HKMA) has renamed the project as e-HKD+. With its new name, the authority is looking to highlight the region’s deeper dive into the digital money ecosystem, an official post by the HKMA said this week.
Moving forward, the HKMA plans to lace the e-HKD CBDC with programmability and offline payments features. A similar step was taken by the Reserve Bank of India (RBI) in the recent past to make the eRupee CBDC capable of processing the online transfer of funds in regions with patchy network connectivity while also giving corporate firms the chance to programme the CBDC in order to incentivise their salaried employees.
“The HKMA will continue to adopt a use-case driven approach in its exploration of digital money,” HKMA Chief Executive Eddie Yue said in a prepared statement.
Another CBDC use case that Hong Kong is zealously exploring is tokenised deposits. As explained in a post by Infosys Blogs, tokenised deposits can be defined as traditional bank deposits that have been converted into blockchain-based digital tokens.
“The outcome of phase two will help the HKMA understand the practical issues that may be faced in designing, implementing and operating a digital money ecosystem that comprises both publicly and privately issued digital moneys. Project e-HKD+ will continue to advance the technology and legal groundwork to support the potential issuance of an e-HKD for the use of individuals and corporates in the future,” the HKMA said.
For the second phase of the e-HKD trials, Hong Kong has onboarded 11 groups of firms from various sectors alongside 21 financial institutions. This phase of the e-HKD trials is espected to last for at least twelve months.
China, Japan, Australia, and Dubai among others, are also adding a layer of unchangeable permanency in maintaining financial records for their CBDCs, while reducing the reliance of the global economy on physical notes.
The International Monetary Fund (IMF) has proposed a framework aimed at facilitating widespread adoption of CBDCs that emphasises on the need for regulation and education around CBDCs while also giving CBDCs more programmibility and its users, some incentives.
