October 10, 2023
By Sharan Kaur Phillora
Hong Kong is stepping into the future of digital currencies with its exploratory trials of a new digital currency named e-HKD. These trials have revealed encouraging possibilities in payment, deposit, and investment spheres, setting a prelude to a digitized financial ecosystem in the city. However, as per the city’s monetary chief, more hands-on experience is essential before marking a launch date.
Here’s what we know:
Eddie Yue Wai-man, the CEO of the Hong Kong Monetary Authority (HKMA), shared insights on the promising applications of e-HKD in programmable payments, tokenized deposits, and assets during a chat with the Post. The trial, which commenced in May, engaged 16 banks and payment firms to test the waters of this digital currency with select clientele groups. This initiative is a stepping stone toward introducing a virtual currency for everyday transactions like shopping, dining, and money transfers.
One notable feature of e-HKD is its programmable payment facet. It allows the encapsulation of rules within the digital currency, ensuring a secure holding of a consumer’s deposit with a merchant safeguarding it against potential business downtrends. This feature was trialed by the Bank of China (Hong Kong) earlier this month, and it’s making strides by enabling customers to prepay for various services like gym memberships and medical treatments using e-HKD.
The venture isn’t only making waves locally. Internationally, it has piqued the interest of the Saudi Central Bank, among other global monetary establishments, which are keen on observing the multi-CBDC (central bank digital currency) project’s progression. This initiative, dubbed the “mBridge”, is a collaborative effort among the central banks of Thailand, the UAE, and the People’s Bank of China, alongside HKMA, aiming to explore the digital currency’s utility in international payment settlements.
Cryptocurrency firm Ripple, in association with Fubon Bank, also tested e-HKD for payments in tokenized real estate, showcasing the digital currency’s potential to promote asset tokenization.
As the trials advance, it is anticipated to be compiled by the participating banks and payment companies during the upcoming fintech week from October 30 to November 5. With these trials, Hong Kong joins the league of around 100 central banks worldwide that are either introducing or mulling over virtual currencies, signifying a global shift towards digital financial landscapes.
The success of these trials could potentially set a benchmark, not only for Hong Kong but for the global community, in embracing digital currencies for a more streamlined and secure financial future.
About the author
Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.