The Hong Kong Monetary Authority (HKMA) announced on Friday that it will begin laying the groundwork for the implementation of a retail central bank digital currency (CBDC). This follows a study and feedback from two rounds of market consultation. The HKMA stated that it is necessary to at least start paving the way for possible future implementation of a retail CBDC.
The Bank for International Settlements, which groups monetary authorities, has highlighted the importance of investigating the digitalization of financial systems to maintain stability. The HKMA report noted that while e-HKD might not have an imminent role to play in the current retail payment market, we believe prospective use cases for e-HKD can emerge quickly out of the rapid evolution, or even revolution, in the digital economy.
Journalists reported in April that the Hong Kong regulator may be leaning towards developing the e-HKD on a permissioned blockchain, and allowing private banks to handle implementation. The HKMA said in Friday’s report that it will be considering various factors from policy objectives to measures adopted by other jurisdictions and further explore technically feasible solutions on this subject matter.