Hong Kong Launches Second Phase of e-HKD Pilot to Explore CBDC Adoption
Hong Kong has initiated the second phase of its e-HKD pilot, focusing on the programmability, tokenization, and atomic settlement aspects of the central bank digital currency (CBDC). The Hong Kong Monetary Authority (HKMA), the de facto central bank, aims to explore new use cases and build upon the results of the first phase, which concluded in October 2023. This move demonstrates Hong Kong’s continued efforts to assess the potential adoption of CBDCs on a wider scale.
Building on the First Phase
The HKMA plans to delve into “select pilots” from the first phase of the e-HKD pilot and explore additional use cases. In the initial phase, which focused on domestic retail use cases for programmable payments, settlement of tokenized assets, and offline payments, several major financial institutions and payment firms participated. These organizations included Alipay, Bank of China, HSBC, Hang Seng Bank, China Construction Bank, Industrial and Commercial Bank of China, Mastercard, Visa, Boston Consulting Group, and ZA Bank.
Enhanced Sandbox and Project Ensemble
On the wholesale CBDC front, the HKMA has launched Project Ensemble, a new project aimed at supporting the enhanced e-HKD sandbox. This initiative seeks to accelerate prototyping, development, and testing of use cases by pilot participants. Additionally, it aims to facilitate the study of interoperability and interbank settlement between e-HKD and other forms of tokenized money.
Timeline and Application Process
The second phase of the e-HKD pilot is expected to continue until mid-2025. Organizations interested in participating in this phase can submit their applications until May 17. The HKMA’s pilot page provides further information and guidelines for potential participants.
Continued Focus on CBDC Research
The HKMA has been researching CBDCs since 2017, with a particular emphasis on studying the potential of e-HKD at both wholesale and retail levels. This ongoing exploration reflects Hong Kong’s commitment to understanding the benefits and challenges associated with CBDC adoption.
Hot Take: Hong Kong Explores CBDC Possibilities with Second Phase of e-HKD Pilot
Hong Kong’s launch of the second phase of its e-HKD pilot signifies the region’s determination to investigate the programmability, tokenization, and atomic settlement aspects of a central bank digital currency (CBDC). By building upon the results of the first phase and engaging in select pilots, Hong Kong aims to explore new use cases and pave the way for wider CBDC adoption. The participation of major financial institutions and payment firms in the initial phase highlights industry recognition of the potential benefits of CBDCs.
The enhanced e-HKD sandbox, supported by Project Ensemble, seeks to accelerate prototyping and testing while facilitating interoperability between e-HKD and other forms of tokenized money. This initiative demonstrates Hong Kong’s commitment to staying at the forefront of CBDC research and development. With the second phase expected to last until mid-2025, interested organizations have an opportunity to contribute to shaping the future of digital currencies in Hong Kong.
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