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The HKMA aims to deliver the initial view of e-HKD by the middle of next year. The published whitepaper covers the research methodology and technical realization of the financial solution.
The Hong Kong Monetary Authority (HKMA) together with the BISIH Hong Kong Centre has released a 50-page official whitepaper on its future retail-focused central bank digital currency (CBDC). The technical whitepaper dubbed the “e-HKD: A technical perspective” according to the HKMA will seek to explore the “potential architectures and design options” that could be of use to the CBDC and its distribution from a technical and regulatory perspective.
The Hong Kong Monetary Authority is reportedly also aiming to create a dual-tier system, which will be the first being designed for a “central bank to issue and redeem CBDC,” with the second being a central system for “commercial banks to distribute and circulate either rCBDC or CBDC-backed e-money.”
The released whitepaper from HKMA is the first paper that unveils a technical architecture including a privacy preservation arrangement that “allows transaction traceability in a privacy-amicable manner.”
The HKMA’s quest to build on the model for retail CBDC has been aided by the Hong Kong Centre of the BIS Innovation Hub with the partnership identifying a couple of issues tied to the implementation of CBDC which demands further exploration in the course of the research.
The duo revealed that the issues identified are summarized under the problems stated in the published Whitepaper adding that, the HKMA subsequently contacted the academia and industry for additional views and comments.
The Chief Executive of the HKMA, Mr. Eddie Yue, speaking to reporters stated that “The Whitepaper marks the first step of our technical exploration for the e-HKD. 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. We also look forward to receiving feedback and suggestions from academia and industry to enrich our perspectives.”
Hong Kong started their research initiative into CBDC’s in 2017 after launching Project LionRock and entered a seven-month collaboration with the Bank of Thailand in 2020 prospecting the “potential of wholesale CBDC for cross-border payments.”
The research initiative subsequently evolved into several CBDC bridges in February 2021 after the introduction of the Central Bank of the United Arab Emirates and the Digital Currency Institute of the People’s Bank of China.
HKMA announced the “Fintech 2025” strategy earlier this year in June which was to strengthen research work on CBDC to modernize the current economic system of Hong Kong to increase its readiness towards CBDC. The HKMA besides the collective and expanded collaboration with peer central banks of the application of wholesale CBDC is also researching and studying ways of issuing retail CBDC in Hong Kong.
The HKMA aims to deliver the initial view of e-HKD by the middle of next year. The published whitepaper covers the research methodology and technical realization of the financial solution.