Hong Kong Monetary Authority Advances e-HKD Research
The Hong Kong Monetary Authority (HKMA) has recently provided new insights into its tests with the e-HKD, a proposed central bank digital currency (CBDC). CEO Eddie Yue revealed that these tests focused on the programmable function of the e-HKD, allowing the issuer to set certain usage limits for the digital currency.
According to the South China Morning Post (SCMP), the Bank of China in Hong Kong tested this feature earlier this month. Additionally, the bank collaborated with ten firms to enable customers to use the e-HKD in various retail payment promotions.
Yue emphasized that there are interesting use cases for e-HKD in programmable payments, tokenized deposits, and tokenized assets. However, he noted that e-HKD is still in its trial stages and must provide better safety, speed, or convenience than current retail payments to be viable.
Project Mbridge
The HKMA is also involved in Project Mbridge, a CBDC network being jointly tested with the People’s Bank of China (PBOC) and the central banks of Thailand and the United Arab Emirates. Yue stated that the participants are addressing important policy issues such as governance and liquidity provisions and plan to launch a minimum viable product by mid-2024.
This timeline differs from what Reuters reported in August, citing sources who claimed that Mbridge could have a minimum working product ready by year-end. Several central banks are closely monitoring Mbridge due to concerns that it could be used to bypass Western countries’ limits and sanctions on fund movements.
Hot Take: The Future of Hong Kong’s Digital Currency
The HKMA’s recent tests on the e-HKD demonstrate their commitment to exploring the potential of a central bank digital currency. The programmable function of the e-HKD opens up various use cases, including programmable payments and tokenized assets. However, to ensure its success, the e-HKD must provide improved safety, speed, or convenience compared to existing retail payment systems.
Additionally, the HKMA’s involvement in Project Mbridge signifies their collaboration with other central banks in developing a CBDC network. While there may be some delays in the project’s timeline, the focus on addressing policy issues and ensuring governance and liquidity provisions shows a dedication to launching a secure and efficient minimum viable product. The future of Hong Kong’s digital currency looks promising as these advancements continue.
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