The Hong Kong Monetary Authority (HKMA) Advances CBDC Pilot Program
The Hong Kong Monetary Authority (HKMA) is moving forward with the second phase of its e-HKD (e-Hong Kong dollar) pilot program, which aims to explore the potential use cases for a central bank digital currency (CBDC). The first phase involved 16 different firms from various sectors examining different areas of CBDC use.
Exploring Use Cases
During the initial phase, participants investigated potential domestic and retail use cases in six categories, including full-fledged payments, programmable payments, offline payments, tokenized deposits, settlement of web3 transactions, and settlement of tokenized assets. One participant, Mastercard, even experimented with using e-HKD on other blockchains by simulating the purchase of physical items and the exchange of non-fungible tokens (NFTs).
Privacy and Security Concerns
The report issued by the HKMA highlighted concerns raised by respondents regarding privacy protections and legal considerations. Additionally, there are security concerns related to programmable retail CBDCs (rCBDCs), as they may be more susceptible to cybersecurity risks.
Phase Two Objectives
The second phase of the pilot program will build upon the success of the first phase and further explore new use cases for e-HKD. It will also delve deeper into select pilots from the initial stage.
Hot Take: Hong Kong Advances CBDC Exploration
The Hong Kong Monetary Authority’s decision to proceed with the second phase of its e-HKD pilot program demonstrates its commitment to exploring the possibilities of a central bank digital currency. By involving multiple firms from different sectors in this initiative, Hong Kong aims to thoroughly examine various use cases for e-HKD. However, concerns regarding privacy and security need to be addressed to ensure the viability and safety of a potential CBDC. Moving forward, the second phase will provide valuable insights and contribute to the ongoing development of a digital currency in Hong Kong.
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