Hong Kong Prepares for Second Phase of CBDC Trial
31 Oct, 2023 ● Coin news
After a successful phase one trial of its in-house central bank digital currency (CBDC), the Hong Kong Monetary Authority (HKMA) is preparing for the second phase of its e-HKD (e-Hong Kong dollar) pilot program.
As part of its "Fintech 2025" strategy, the HKMA launched the e-HKD pilot program in November 2022 to assess the commercial viability of an in-house CBDC.
The first phase focused on e-HKD in six areas: full-fledged payments, programmable payments, offline payments, tokenized deposits, and Web3 transaction and tokenized asset settlement.
The HKMA report, which detailed the findings of the e-HKD phase one trial, identified programmability, tokenization, and atomic settlement as three key areas where Hong Kong's CBDC could benefit consumers and businesses.
“The next phase of the e-HKD pilot program will build on the success of Phase 1 and consider exploring new use cases for an e-HKD.”
The HKMA intends to "delve deeper" into some of the use cases that demonstrated promising CBDC applications in the phase one trial.
Technical considerations indicate a preference for distributed ledger technology-based design due to its interoperability and scalability capabilities.
The CBDC program in Hong Kong consists of three stages: foundation layer development, industry pilots and iterative enhancements, and full launch.
The e-HKD program trial is currently on its second rail, with public and private organizations working together to ensure commercial viability for both parties.
The HKMA also stated that it will continue to work on rail one initiatives such as laying the legal and technical groundwork for the e-HKD.
Along with CBDC-specific efforts, numerous central and commercial banks collaborated on Project mBrigde to investigate solutions for faster, cheaper, and more transparent cross-border payments.
On September 25, HKMA CEO Eddie Yue announced that mBridge would be expanded and commercialized as it welcomed new banking members from China, Hong Kong, Thailand, and the UAE.
Yue added: “We are expecting to welcome more fellow central banks to join this open platform. And very soon, we will launch what we call a minimum viable product, with the aim of paving the way for the gradual commercialization of mBridge."