Search on TFTC
Hong Kong Monetary Authority Advances with e-HKD CBDC Pilot Phase Two

Hong Kong Monetary Authority Advances with e-HKD CBDC Pilot Phase Two

Mar 14, 2024

Hong Kong Monetary Authority Advances with e-HKD CBDC Pilot Phase Two

The Hong Kong Monetary Authority (HKMA) has announced the initiation of phase two in its e-Hong Kong dollar (e-HKD) pilot program, advancing the exploration of a central bank digital currency (CBDC). The second phase of the pilot aims to delve further into the potential applications of a digital version of the Hong Kong dollar, building upon the findings from the initial phase.

During phase one, the HKMA conducted tests on the use of a CBDC in various scenarios, including domestic retail payments, offline transactions, and the settlement of tokenized assets. The regulator's focus in the next phase will be on "programmability, tokenization, and atomic settlement," as well as investigating additional use cases not previously examined.

In a statement, the HKMA said, “The next phase will delve deeper into select pilots from Phase 1 where an e-HKD could add unique value, namely programmability, tokenization and atomic settlement, as well as explore new use cases that have not been covered in the previous phase.”

This progression comes after the HKMA's earlier announcement this month about the commencement of a regulatory sandbox designed for testing wholesale CBDCs and tokenization. This sandbox will provide support for the ongoing e-HKD pilot's second phase.

Interested organizations have been invited to participate in the pilot and have until May 17 to submit their proposals for potential use cases of the digital Hong Kong dollar. The HKMA has outlined specific criteria for evaluating applications, including innovation, potential impact on consumer experience, readiness for market testing, compliance with regulations, and the ability to maximize the use of e-HKD in Hong Kong.

The e-HKD project is part of the “Fintech 2025” strategy, which aims to foster "digital finance adoption" within the special administrative region by 2025. Research on CBDCs by the HKMA dates back to 2017, with the central bank now intensifying its efforts to prepare for potential CBDC issuance at both wholesale and retail levels.

Notable participants like Visa have already engaged with the e-HKD pilot. Visa completed a pilot test on November 1, involving the tokenization of deposits in collaboration with local banks HSBC and Hang Seng Bank, where funds were represented on a blockchain ledger backed by a balance sheet.

As Hong Kong joins the ranks of over 100 jurisdictions globally exploring CBDCs, the HKMA's current pilot phase is estimated to run until mid-2025. The HKMA's advancement into the second phase of the e-HKD pilot signals a significant step towards the potential implementation of CBDCs within the financial system of Hong Kong.

Hong Kong Starts New Phase of CBDC Testing
Phase 2 of the e-HKD pilot will be supported by the recently launched regulatory sandbox for testing wholesale CBDCs and tokenization, the Hong Kong Monetary Authority said.


Current Block Height

Current Mempool Size

Current Difficulty