The HKMA Completes Phase 1 Trial of e-HKD CBDC
The Hong Kong Monetary Authority (HKMA) has successfully completed the Phase 1 trial of its in-house central bank digital currency (CBDC), known as e-HKD. The trial is part of the HKMA’s “Fintech 2025” strategy, and its goal is to evaluate the commercial viability of the CBDC.
During Phase 1, the HKMA focused on six areas related to e-HKD, including payments, programmability, offline payments, tokenized deposits, settlement of Web3 transactions, and settlement of tokenized assets. The findings highlighted programmability, tokenization, and atomic settlement as key areas where Hong Kong’s CBDC could benefit consumers and businesses.
The next phase of the e-HKD pilot program will explore new use cases for the CBDC based on the success of Phase 1. The HKMA plans to delve deeper into promising applications identified during the trial. Distributed ledger technology (DLT)-based design is being considered due to its interoperability and scalability capabilities.
A Three-Rail Approach for Hong Kong’s CBDC
Hong Kong’s CBDC program follows a three-rail approach that includes foundation layer development, industry pilots and iterative enhancements, and full launch. The current phase focuses on industry pilots and is supported by public and private organizations to ensure commercial viability.
In addition to the local efforts for CBDCs, multiple central and commercial banks have joined forces under Project mBridge. This initiative aims to explore solutions for faster, cheaper, and more transparent cross-border payments. Recently, new banking members from China, Hong Kong, Thailand, and the UAE joined mBridge.
HKMA CEO Eddie Yue announced plans to expand and commercialize mBridge, with the aim of gradually launching a minimum viable product. The goal is to pave the way for the commercialization of mBridge and welcome more central banks to join the open platform.
Hot Take: HKMA Advances e-HKD CBDC Pilot Program
The Hong Kong Monetary Authority (HKMA) has successfully completed Phase 1 of its e-HKD pilot program, signaling progress in the development of Hong Kong’s central bank digital currency (CBDC). The findings of the trial highlighted areas where the e-HKD could benefit consumers and businesses, such as programmability, tokenization, and atomic settlement.
The next phase of the pilot program will focus on exploring new use cases for the e-HKD CBDC, building on the success of Phase 1. The HKMA is considering using distributed ledger technology (DLT)-based design for its interoperability and scalability advantages.
Furthermore, Hong Kong’s CBDC program follows a three-rail approach, with industry pilots currently underway. Additionally, HKMA is collaborating with other banks under Project mBridge to explore solutions for cross-border payments. The expansion and commercialization of mBridge are expected to pave the way for broader adoption of CBDCs worldwide.
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