November 28, 2022

The Hong Kong Monetary Authority (HKMA) has published a paper outlining the research status of its proposed retail central bank digital currency (rCBDC) and plans for its further development. This is the third paper published by HKMA on e-HKD, as the proposed CBDC is called.

The proposed rCBDC will You have A two-tier structure consisting of the interbank wholesale system and the retail user wallet system. Wholesale CBDCs have not yet been introduced in Hong Kong, but the search for them began in 2017, four years before rCBDC planning began. The rCBDC will be a non-broker. paper notes:

“While it appears that e-HKD may not have an imminent role in the current retail payments market, we believe that potential use cases for e-HKD could emerge rapidly from the rapid development, or even revolution, of the digital economy.”

One of the use cases under consideration is “Using CBDC as an on and off ramp tool.” [decentralized finance, or] DeFi. “

Although there is no target start date in the newspaper, the local press mentioned That rCBDC testing may begin in the last quarter of this year.

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The bulk of the paper was devoted to responses to previous papers, one of which was a request for comment on the technical aspects of rCBDC, while the other addressed policy and design. Among them, the papers received 75 responses from stakeholders.

The majority of commentators on the technical side preferred privacy and cyber security to take precedence over efficiency. There was a wide range of opinions about performance and scalability.

Offline and cross-border payments and interoperability with existing payment systems were major concerns expressed in connection with the design. Particularly noted was the interoperability with the e-CNY CBDC in mainland China, which is now in the experimental stage.