The Hong Kong Monetary Authority launched the digital Hong Kong dollar pilot project, and the Hong Kong dollar stable currency is coming

The program will undergo its first round of trials during the year.

Written by: Jun Entrance

Today (May 18), the Hong Kong Monetary Authority (HKMA) officially announced the launch of the "Cyber Hong Kong Dollar" pilot project!

The main content of the program is that 16 selected companies from the financial, payment and technology sectors will conduct the first round of trials this year to conduct in-depth research on the potential use cases of the "Cyber Hong Kong Dollar" in six areas, including comprehensive payment, programmable payment, offline Payments, tokenized deposits, third-generation Internet (Web3) transaction settlement and tokenized asset settlement.

Hong Kong Monetary Authority's "three-track approach"

On September 20, 2022, the Hong Kong Monetary Authority issued a policy position paper, which for the first time elaborated on the policy position and future development direction of the central bank's digital currency at the retail level (ie "digital Hong Kong dollar" or e-HKD), and launched a three-track approach to work , to prepare for the possible launch of a retail-level central bank digital currency (i.e. "digital Hong Kong dollar") in the future!

• The first track aims to lay the technical and legal foundation for the future launch of the "Cyber Hong Kong Dollar". Specifically, the Hong Kong Monetary Authority will develop plans to develop the wholesale layer of the two-tier structure of the "Cyber Hong Kong Dollar".
• The second track will run parallel to the first track. The Hong Kong Monetary Authority will conduct in-depth studies on the use cases and the application, implementation and design of the "Cyber Hong Kong Dollar" under the second track.
• The third track is related to the official launch of the "Digital Hong Kong Dollar", which is mainly to summarize the phased results of the first and second tracks, so as to make a more comprehensive deployment and set a timetable for the launch of the "Digital Hong Kong Dollar".

Pilot program as the top priority of the second track

The HKMA will work closely with different stakeholders in the pilot project and conduct a series of experiments to jointly explore the application scenarios of "Cyber Hong Kong Dollar" and related implementation and design issues. Through trial and error, the HKMA can learn from the results of each trial and refine the ways in which a "digital Hong Kong dollar" might be implemented. The Hong Kong Monetary Authority has not yet made a decision on whether to officially launch the "Digital Hong Kong Dollar".

Senior representatives of the 16 selected companies attended the launch ceremony of the pilot scheme. During the event, selected companies presented highlights of their proposed use cases. The HKMA will work closely with the selected companies in the coming months to conduct the trials and monitor their progress. The HKMA expects to share the experience learned from the trials with the public at Hong Kong Fintech Week 2023, but the actual results of the trials may change over time. The HKMA also expects to conduct more rounds of trials jointly with the industry in the future.

In order to promote cooperation between the government, industry and academia in central bank digital currency (CBDC) research, the HKMA plans to set up a CBDC expert group. The expert panel will consist of leading academics from local universities who will provide valuable input to support Hong Kong in continuing to explore key policy and technical issues of CBDC, such as privacy protection, cybersecurity and connectivity.

Suggested use cases for selected companies vary

Notably, Alipay Financial Services (HK) was selected for Programmable Payments - User Rewards Program, Ripple Labs was selected for Tokenized Asset Settlement Use Case, and Industrial and Commercial Bank of China (Asia) Limited and Standard Chartered Bank (Hong Kong) Limited were selected for Offline Payments use cases, Visa and Mastercard were selected as tokenized deposit and Web3 transaction settlement use cases respectively.

Mr Yue Wai-man, Chief Executive of the HKMA, said: "While the HKMA has not yet decided whether or when the 'CyberHKD' will be launched, we are delighted to launch the 'CyberHKD' Pilot Programme. Prepare for the possible launch of the "Cyber Hong Kong Dollar" in the future. We thank the industry for actively participating in the experiment and look forward to the results of the experiment. We are also happy to see a number of academic experts participating in the CBDC research. By promoting cooperation between the government, industry and academia, we hope Research and development work that keeps pace with the times and translates its gains into tangible business opportunities.”

In general, the launch and implementation of the "Cyber Hong Kong Dollar" Pilot Project has further accelerated the launch of the "Cyber Hong Kong Dollar". We can also see the first round of trials of potential payment use cases within this year. Maybe you can boldly imagine the usage scenarios and experience of the Hong Kong dollar stablecoin! This also brings Hong Kong's blueprint of becoming a "digitalized" international financial center one step closer!

** Even looking back, since the birth of USDT in 2015, more than 120 billion US dollar stablecoins have been issued. For Hong Kong dollar stablecoins, there is a sea of stars ahead. **