Visa Completes CBDC Pilot Programme with Hong Kong Banks
Visa, a leading payment processor, has successfully completed the central bank digital currency (CBDC) Pilot Programme in Hong Kong, in collaboration with HSBC and Hang Seng Bank. The e-HKD Programme involved the tokenization of deposits, where funds deposited with a bank are converted into digital tokens on the bank’s blockchain ledger.
Visa’s pilot programme revealed that interbank transfers using CBDCs were settled in near real-time. Tokenized deposits were burned on the sending bank’s ledger, minted on the receiving bank’s ledger, and simultaneously settled through a simulated wholesale CBDC layer. This process significantly reduced settlement time compared to traditional systems.
Furthermore, Visa’s platform operated 24/7 during the pilot programme, surpassing the limitations of traditional payment systems that do not operate after hours or on weekends. The use of blockchain networks available globally and supported by teams in different time zones allowed for seamless testing.
The tokenized deposits used encryption technology, ensuring privacy and confidentiality. Although the transactions could be viewed on blockchain explorers, the identity of participants, balances, and transaction amounts remained concealed from non-bank users.
Exploring Tokenized Asset Markets and Programmable Finance
In the next phase of development, Visa aims to explore tokenized asset markets and programmable finance. One potential use case mentioned is “Property Payments,” where automated transactions can occur between buyers and property developers upon reaching the completion date of a contract.
The successful results of the e-HKD Pilot Programme have paved the way for phase two of Visa’s collaboration with Hong Kong banks. This partnership demonstrates the potential of CBDCs in revolutionizing payment systems and opening up new possibilities for financial innovation.
Hot Take: Visa’s CBDC Pilot Programme in Hong Kong Shows Promise for Real-Time Settlements
Visa’s completion of the CBDC Pilot Programme with HSBC and Hang Seng Bank in Hong Kong signifies a major step forward in the adoption of central bank digital currencies. The pilot demonstrated that interbank transfers using CBDCs can be settled in near real-time, improving efficiency and reducing settlement time compared to traditional systems.
Furthermore, Visa’s ability to operate its platform 24/7, along with the privacy and confidentiality provided by encryption technology, highlights the advantages of blockchain-based payment systems. This successful pilot programme sets the stage for further exploration of tokenized asset markets and programmable finance, showcasing the potential for CBDCs to transform financial transactions and processes.
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