The Hong Kong Monetary Authority (HKMA) is embarking on the second phase of its digital Hong Kong Dollar project in the coming year. This phase will focus on exploring innovative applications and fostering collaborations within the financial industry.
Advancing the Digital Hong Kong Dollar
During the Fintech Foresight Seminar organized by Hong Kong 01, Nelson Chow, the Chief Fintech Officer of HKMA, shared that the central bank digital currency (CBDC) of Hong Kong has successfully completed its initial phase and is now moving forward towards the next phase in 2024.
Building upon the foundation established in the e-HKD Pilot Program’s first phase, HKMA’s upcoming step will delve into real-world applications of the digital Hong Kong Dollar. The aim is to integrate it into the broader economic framework. Chow emphasized that Hong Kong is not falling behind but is among the leading groups conducting research on CBDC. He mentioned, “The e-HKD Pilot Program is of research value to other central banks as well.”
Exploring the Potential Impact
The second phase of the project will prioritize assessing the potential impact of the digital currency on everyday transactions. Additionally, partnerships with banking institutions and fintech companies will be leveraged to expand its practical use and acceptance.
Chow highlighted that e-HKD brings significant value to the retail payment ecosystem. Key features include programmability, tokenization, and instant settlement, which facilitate faster, more cost-effective, and inclusive transactions. These advantages are particularly beneficial for emerging economic and financial activities, such as web3 transactions.
However, before implementing the digital Hong Kong Dollar on a large scale, further research is required to determine the associated benefits. Chow clarified that while the second phase is planned, the launch date for e-HKD has not been finalized. The outcomes of the test phases and the development needs of local and international markets will contribute to the ultimate decision.
