HKMA releases a position paper on e-HKD

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Authored by: Simon Deane and Jennifer Lok

As part of the Hong Kong Monetary Authority’s (“HKMA”) “Fintech 2025” strategy, announced in June 2021, the HKMA has started a project to study the prospects of issuing retail Central Bank Digital Currency (rCBDC) in Hong Kong, i.e. e-HKD, and conducted two rounds of market consultations, one on high-level technical design and one on key policy and design issues. The technical whitepaper “e-HKD: a technical perspective” published in October 2021 by the HKMA can be accessed here, and the policy discussion paper “e-HKD: A policy and design perspective” published in April 2022 by the HKMA can be accessed here.

Following the two rounds of market consultations, the HKMA released a position paper titled “e-HKD: Charting the Next Steps” (“Paper”) recently on 20 September 2022 to set out its policy stance on e-HKD, and introduced a three-rail approach for possible implementation of e-HKD in the future:

• Rail 1 focuses on establishing the technology and legal foundations for supporting the implementation of e-HKD, including the formulation of a system development plan in respect of the wholesale layer of the two-tier distribution structure and preparation for relevant legislative amendments.
• Rail 2, which will run in parallel with Rail 1, involves deepening research on application, implementation, and design issues relating to e-HKD, as well as conducting a series of pilot programmes in close collaboration with various stakeholders (including banks and the industry) to gain actual experience on use-cases.
• Rail 3 concerns the launching of e-HKD, and its timeline will be subject to actual progress of the work under Rail 1 and Rail 2 and the pace of relevant local and international market developments.

The Paper is available here.

Key Contacts

Simon Deane

Consultant | Banking and Finance

Email or call +852 2825 9209