The e-Hong Kong dollar (e-HKD) pilot program has entered its second phase, as announced by the Hong Kong Monetary Authority (HKMA). The HKMA is now calling on industry participants to apply and submit potential use cases for the central bank digital currency (CBDC).
The second phase aims to delve deeper into the areas identified in the first phase where the e-HKD could bring value, including programmability, tokenization, and atomic settlement. Additionally, the HKMA plans to explore new use cases that were not previously covered.
Market participants have until May 17 to submit their applications, and the HKMA estimates that the second phase will last until mid-2025 to allow sufficient time for testing and evaluation of proposed use cases.
The HKMA has provided guidelines for those interested in participating in the pilot. Applications will be assessed based on their innovative elements, uniqueness compared to existing market offerings, impact on consumer experience, readiness for market testing, compliance with regulations, and how they maximize the use of e-HKD in Hong Kong.
The CBDC project was initiated in 2021 as part of Hong Kong’s “Fintech 2025” strategy, aiming to promote the adoption of digital finance within the region by 2025. The HKMA has been researching CBDCs since 2017 to understand their potential applications and is now intensifying efforts to enhance Hong Kong’s readiness to issue CBDCs at both wholesale and retail levels.
Prominent institutions, including Visa, have already participated in the e-HKD pilot. Visa completed a successful pilot test of the digital Hong Kong dollar in collaboration with local banks HSBC and Hang Seng Bank. The pilot involved the tokenization of deposits, where money was minted on a blockchain ledger with the backing of a balance sheet.