In a bid to revolutionize the way people use money, the Hong Kong Monetary Authority (HKMA) has launched the second phase of a pilot programme to explore innovative uses for a central bank digital currency (CBDC). This move comes five months after the successful completion of the first trial run, which unveiled exciting possibilities for the future of digital payments.
“Building on the success and experience of phase 1, the next phase will delve deeper where an e-HKD could add unique value, namely programmability, tokenization, and atomic settlement,” the HKMA said in a press release on Thursday. Atomic settlement refers to instant payments, a feature that could revolutionize the speed and efficiency of financial transactions.
The first trial run of the e-HKD, which featured 16 banks and payment companies, tested six different use cases, including online payments, payments in shops and restaurants, and the collection of government payouts. This initial phase represented the first step towards introducing a virtual coin that the public may eventually use for everyday transactions.
HSBC, Hong Kong’s biggest bank, participated in the first phase and intends to continue its involvement in the second phase. “HSBC has been a key participant in the e-HKD pilot and is keen to drive initiatives on all fronts of digital money. We look forward to participating in Phase 2 of the e-HKD pilot programme,” a spokesman said.
In its announcement, the HKMA revealed plans to build an “enhanced e-HKD sandbox” under its Project Ensemble, focusing on the ecosystem for a wholesale central bank virtual currency rollout. This sandbox will support participants in the second pilot phase in prototyping, developing, and testing their use cases, as well as studying interoperability and interbank settlement between e-HKD and other forms of tokenized money.
Applications to participate in the second trial phase of e-HKD are due by May 17, with interviews expected to take place in the early summer. Phase 2 is expected to last until mid-2025 to give participants sufficient time to test and evaluate their proposed use cases.
Hong Kong has been at the forefront of experimenting with different forms of digital money and facilitating the blockchain ecosystem. In the past week alone, the HKMA has launched a “wCBDC” pilot to improve interbank settlements using tokenized money, and a stablecoin sandbox to allow companies to trial cryptocurrency tokens pegged to fiat currency in the city.
With these initiatives, Hong Kong is not only exploring the future of money but also positioning itself as a leader in digital innovation in the financial sector. The future of finance is digital, and Hong Kong is at the forefront of shaping that future.
(Source: SCMP | Coin Telegraph | Central Banking)
