HKMA publishes the “e-HKD Pilot Programme Phase 1 Report”

The Hong Kong Monetary Authority (HKMA) has published a report on the key findings from phase 1 of the HKMA’s e-HKD Pilot Programme. To recall, the e-HKD pilot program was established two years ago in 2021 to evaluate the potential use of a retail Central Bank Digital Currency (rCBDC) in Hong Kong, the so-called e-HKD. Numerous participants engaged in the program and explored various use cases for an rCBDC, including „full-fledged payments“, programmable and offline payments, and tokenized deposits, to name a few.
Following the conclusion of the first phase of this pilot program, the HKMA now published the named report which presents initial findings on those use cases and provides initial insights into potential benefits and issues that the introduction of an e-HKD would bring. Specifically, the document highlights that an rCBDC could bring significant advantages to the payment ecosystem, specifically in terms of programmability, tokenization, and instant settlement. It could lead to faster, cost-efficient, and more inclusive transactions and potentially enable new types of economic transactions. However, the document also notes that the realization of e-HKD’s unique value on a larger scale would strongly depend on market development and adaptation. Some inefficiencies in the current payment system are due to longstanding business norms, and technology alone may not address these issues.
To conclude, the HKMA once again emphasizes that it has not yet decided whether or when to introduce the e-HKD. Further careful analysis is necessary regarding the currency’s market positioning, the roles of the HKMA and the industry in the implementation of the new rCBDC, and other relevant factors such as policy, technical design, and legal considerations. Nevertheless, phase 1 provided valuable insights and highlighted areas for future study the HKMA will pick up on in the next phase of the prgram.