Hong Kong will begin testing digital currency

Hong Kong, a special administrative area of China, will test a digital version of its currency this year in anticipation of a future rollout. Hong Kong will begin testing digital currency is making an effort to catch up to those nations that have already introduced central bank digital currencies, such as the People’s Republic and its digital yuan programmed.

Q4 is the planned time for digital Hong Kong Dollar trials.

In the remaining months of the year, Hong Kong will begin testing digital currency, a digital version of the Hong Kong dollar. According to the Hong Kong Monetary Authority (HKMA), as reported by the South China Morning Post, the trials would be made easier by the passage of new laws and the development of the digital infrastructure required to support the initiative.

Q4 is the planned time for digital Hong Kong Dollar trials.

In the remaining months of the year, Hong Kong plans to start testing the e-HKD, a digital version of the Hong Kong dollar. According to the Hong Kong Monetary Authority (HKMA), as reported by the South China Morning Post, the trials would be made easier by the passage of new laws and the development of the digital infrastructure required to support the initiative.

Although there might not be an imminent use case for e-HKD, taking into account the findings of our study and the feedback from market consultation and international development, the HKMA will start paving the way for e-HKD implementation and will proceed toward a launch of e-HKD in the future.

The senior official also mentioned that other jurisdictions are already looking at the creation of CBDCs. Participants in the banking authority’s discussions voiced worry about Hong Kong’s perceived lack of progress and the need to catch up with the global trend.

Selected banks, payment providers, and IT companies will participate in the testing. According to Lee, these organizations will look at how their staff and a select group of clientele use the digital money. The deputy CEO said, «The introduction of the e-HKD is intended to provide the client greater choice.» Additionally, he highlighted that the action won’t have an impact on Hong Kong’s three note-issuing banks.

After tests, the HKMA will set a launch date for the e-HKD

According to Colin Pou, executive director for financial infrastructure at the HKMA, the e-HKD launch date would be determined by the Hong Kong Monetary Authority following the trial phase. The CBDC strategy was initially introduced by the regulator in June 2021 as a component of the Fintech 2025 strategy. The discussions finished in May after a white paper was published in October.

Numerous central banks have been researching digital currencies and developing their own at the same time. The People’s Bank of China (PBOC) has been conducting e-CNY pilot projects in a number of locations, and only recently announced the expansion of the pilot area in four of those cities to the provincial level.

According to Howard Lee’s announcement earlier this month, Hong Kong has also tested the e-CNY on a modest scale this year. The region’s banking officials said last summer that they will connect the digital yuan to its domestic payments infrastructure. Along with the PBOC, the HKMA has been collaborating on cross-border CBDC payments with the central banks of Thailand and the United Arab Emirates.

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