Another in a long line of CBDC postings, this one from The Block. As we have been keeping readers up to date on CBDC events and progress, we see that the HKMA has published a technical white paper based on research that has been conducted as of June this year under a project e-HKD. The topic is retail CBDC. In actuality the HKMA has been looking into CBDCs for several years now, previously focusing on wholesale cross-border, so this is just the latest effort to get moving on a retail digital currency issued by the HKMA..
‘According to the HKMA, a two-tier distribution model for a retail CBDC makes a good design: the wholesale layer and the retail layer. “Only intermediaries (banks and PSPs [payment service providers]) — which are relatively more trustworthy — can participate in the wholesale layer, whereas, the retail layer is an open system accessible to the general public,” said the HKMA. In other words, the HKMA would issue and redeem a retail CBDC, and commercial banks would distribute and circulate the CBDC….
“The Whitepaper marks the first step of our technical exploration for the e-HKD,” said Eddie Yue, CEO of the HKMA. “The knowledge gained from this research, together with the experience we acquired from other CBDC projects, would help inform further consideration and deliberation on the technical design of the e-HKD.” ‘
So while a myriad of central banks continue to test and explore CBDCs, we await the expected publication of the Federal Reserve’s research of the past year-plus through collaboration between the Federal Reserve Bank of Boston and MIT. It is not clear why the delay since the research results were supposed to be published during the summer.
‘Based on its proposed technical design, the HKMA has identified several areas for further discussion, which it has summarized as seven problem statements. These are ensuring privacy, interoperability, performance and scalability, cybersecurity, compliance, operational robustness and resilience, and technology-enabled functional capabilities….The HKMA is seeking feedback and suggestions on its proposed design from academia and industry by December 31.’
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group
