The Hong Kong Monetary Authority (HKMA) is Working on Two CBDC Projects
The Hong Kong Monetary Authority (HKMA) is actively involved in two projects related to central bank digital currency (CBDC). One of these projects is called mBridge, which is a cross-border CBDC initiative being developed by the central banks of Hong Kong, China, Thailand, and the United Arab Emirates. The aim is to create an alternative to Swift’s payment infrastructure and potentially pave the way for more payment fragmentation in other regions. The mBridge project is coordinated under the Bank for International Settlements (BIS) and involves significant companies like Tencent.
Another CBDC-related project that HKMA is working on is called e-HKD. This digital currency has various use cases such as payments, deposits, and investment scenarios. Eddie Yue Wai-man, CEO of HKMA, mentioned that e-HKD can be utilized in programmable payments and new areas like tokenized deposits and assets. Currently, HKMA is conducting trials with 16 major businesses, including HSBC, which issued eHKD to students and staff at the Hong Kong University of Science and Technology Business School. Additionally, Standard Chartered and Fubon Bank are exploring the use cases of CBDC, with Fubon Bank planning to collaborate with Ripple for a real estate tokenization pilot.
Hot Take: CBDC Initiatives in Hong Kong Show Promise for Future Payment Systems
The initiatives taken by HKMA in developing CBDC projects like mBridge and e-HKD demonstrate the potential for transforming payment systems in Hong Kong and beyond. By creating a cross-border CBDC network through mBridge, there could be an alternative to Swift’s dominant payment infrastructure, allowing for increased payment fragmentation in other regions as well. Moreover, the use cases of e-HKD highlight the versatility of digital currencies, including programmable payments and tokenized assets. The ongoing trials and collaborations with major businesses and banks indicate a proactive approach towards exploring the possibilities of CBDCs. These initiatives have the potential to shape the future of payment systems and drive innovation in the financial sector.
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