Visa Successfully Concludes Participation in Hong Kong CBDC Pilot Program
Visa has successfully completed its participation in the Hong Kong Monetary Authority’s (HKMA) pilot program for a central bank digital currency (CBDC) in collaboration with HSBC and Hang Seng Bank. This program is part of Hong Kong’s “Fintech 2025” strategy and aims to explore the practicalities and benefits of a digital Hong Kong dollar (e-HKD).
The pilot program focuses on the tokenization of bank deposits, converting money held in banks into digital tokens on a blockchain ledger backed by the bank’s balance sheet. Visa’s report highlighted the efficiency of the system, with near real-time interbank transfers, offering significant improvement over traditional banking systems that operate within restricted hours.
Visa plans to further explore tokenized assets and programmable finance based on the positive outcomes from the pilot. The company envisions streamlining processes and reducing delays, such as automated property payments.
Hong Kong’s e-HKD Pilot Demonstrates CBDC Potential
Visa joined the e-HKD pilot program in May as one of 16 entities selected for the first round of pilots. Launched by the HKMA in November 2022, this program evaluates the feasibility of a proprietary CBDC. The first phase explored various applications, including payment solutions, programmable payments, and tokenization of deposits and asset transactions.
The results from the initial phase highlight the advantages of programmability and tokenization, which can benefit consumers and businesses in Hong Kong. The e-HKD project follows a “three-rail” approach, establishing a technological and legal framework, conducting pilot programs, and overseeing the official launch of e-HKD based on earlier insights.
In addition to the e-HKD project, the HKMA is involved in Project mBridge to enhance cross-border payments. This project aims to make transactions faster, cheaper, and more transparent, and it is expanding with new banking partners from China, Hong Kong, Thailand, and the United Arab Emirates.
Hot Take: Visa Concludes Successful CBDC Pilot Program in Hong Kong
Visa’s participation in the Hong Kong Monetary Authority’s pilot program for a central bank digital currency (CBDC) has concluded on a positive note. The program focused on exploring the benefits of a digital Hong Kong dollar (e-HKD) through the tokenization of bank deposits. Visa’s report highlighted the efficiency and enhanced privacy of the system, with near real-time interbank transfers and encrypted transactions.
Visa is now looking ahead to the potential of tokenized assets and programmable finance, aiming to streamline processes and reduce delays in areas such as property payments. The success of this pilot program paves the way for the second phase of the e-HKD program.
The e-HKD pilot demonstrates the potential of CBDCs in Hong Kong, with programmability and tokenization offering significant advantages for consumers and businesses. Additionally, the HKMA’s involvement in Project mBridge showcases its commitment to enhancing cross-border payments.