How Hong Kong’s CBDC Roadmap Resembles the RBI’s Approach with eRupee
Hong Kong is actively accelerating efforts to give its fiat currency, the Hong Kong dollar (HKD), a blockchain revamp. The special administrative region (SAR) of China has launched its e-HKD central bank digital currency (CBDC) into the second comprehensive phase of trials. Following the Reserve Bank of India’s lead, Hong Kong authorities are now focused on adding multiple layers of useful features to the CBDC to make it more lucrative for end users.
As the CBDC initiative enters its second phase, the Hong Kong Monetary Authority (HKMA) has rebranded the project as e-HKD+. With the new name, the authority aims to highlight the region’s deeper dive into the digital currency ecosystem, a official message by the HKMA this week.
The HKMA plans to provide programmability and offline payment features to the e-HKD CBDC. A similar move was taken in the recent past by the Reserve Bank of India (RBI) to enable the eRupee CBDC to process online remittances in regions with patchy network connectivity, while also giving businesses the opportunity to program the CBDC to incentivize their salaried employees.
“The HKMA will continue to take a use-case-driven approach in exploring digital money,” HKMA Director Eddie Yue said in a prepared statement.
Another CBDC use case that Hong Kong is diligently exploring is tokenised deposits. As explained in a after According to Infosys Blogs, tokenised deposits can be defined as traditional bank deposits converted into blockchain-based digital tokens.
“The outcome of Phase Two will help the HKMA understand the practical issues that may arise in designing, implementing and operating a digital currency ecosystem that includes both publicly and privately issued digital currencies. Project e-HKD+ will continue to enhance the technology and legal basis to support the potential issuance of an e-HKD for use by individuals and businesses in the future,” the HKMA said.
For the second phase of the e-HKD trials, Hong Kong has brought on board 11 groups of companies from different sectors, as well as 21 financial institutions. This phase of the e-HKD trials is expected to last at least 12 months.
China, Japan, Australia and Dubai are also adding a layer of immutable permanence to the financial administration of their CBDCs, while reducing the global economy’s reliance on physical banknotes.
The International Monetary Fund (IMF) has proposed a framework aimed at promoting the widespread adoption of CBDCs. It emphasises the need for regulation and education around CBDCs, but also makes them more programmable and provides some incentives for their users.
