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HKMA releases a technical whitepaper on Retail Central Bank Digital Currency (“CBDC”)

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The Hong Kong Monetary Authority (“HKMA”) released a technical whitepaper on CBDC on 4th October 2021 “e-HKD: A technical perspective” (“Whitepaper”).

The HKMA announced its “Fintech 2025” strategy in June this year, one part of which is to strengthen research work into CBDC with a view to future-proofing Hong Kong in terms of CBDC readiness. Apart from the continued and expanded collaborative effort with peer central banks on the cross-border application of wholesale CBDC, the HKMA has commenced a study into the prospects of issuing retail CBDC in Hong Kong, i.e. e-HKD, covering both technical and policy considerations, and aims to come up with an initial view by the middle of next year. The publication of the Whitepaper constitutes part of the HKMA’s research effort on the technical front.

The Whitepaper explores potential technical design options for issuing and distributing retail CBDCs. This is the first among similar papers published by central banks to unveil a technical architecture that includes a ground breaking privacy preservation arrangement that allows transaction traceability in a privacy-amicable manner. In the course of this research, the HKMA has also identified a number of issues for further exploration which are summarised in the problem statements in the Whitepaper. The HKMA is seeking feedback and suggestions on its proposed design from academia and the industry by 31 December 2021.

The report can be found here.

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