The Hong Kong Monetary Authority (HKMA) launched the e-HKD Pilot Program this month to assess the viability for an e-HKD digital currency. The completion of the Phase 1 portion of the program revealed valuable findings for e-HKD use cases.
According to the report HKMA put out, 16 firms—including Mastercard Asia/Pacific, Alipay Financial Services, and China Construction Bank (Asia) Corporation—were selected to participate in 14 pilots in six categories: full-fledged payments, programmable payments, offline payments, tokenized payments, settlement of Web3 transactions, and the settlement of tokenized assets.
A policy decision has not been officially made to introduce the e-HKD as elements such as legal considerations, in addition to technical and policy design, would need further investigation.
CBDCs Are Being Tested Worldwide
Central bank digital currencies (CBDCs) continue to gain a foothold in the financial payment systems—and for good reason. Financial service providers stand to save considerably as they move away from costly physical payments structures. CBDCs can also enhance the efficiency and speed of payments in many electronic payment systems worldwide, and for the unbanked, CBDCs are accessible through mobile, which can boost financial inclusion.
According to The Atlantic Council, 65 countries (including Australia, Brazil and China) are in the advanced stages of creating their own CBDC. And more than 20 central banks have launched their own CBDC pilot program, including Russia and Japan.
Europe also has its eyes on releasing a retail digital euro, but before this can become a reality, there needs to be some preliminary groundwork laid. There are foundational principles that need to be followed, including creating value for the end customer and the economy, preserving financial stability and bank funding, and safeguarding privacy and compliance requirements.
Meanwhile, the U.S. remains in the research phase. Senators Ted Cruz, Mike Braun, and Chuck Grassley have reportedly blocked the Fed from creating a direct-to-consumer CBDC.
