A CBDC (Central Bank Digital Currency) for Hong Kong has been identified as a sub-segment of fintech development by the government. This, and more, were revealed by the Hong Kong Monetary Authority (HKMA) at the launch of Fintech 2025, a strategic plan to drive financial technology (fintech) development in the nation.
Although more details of the plan will be shared by the HKMA at a later time, five focus areas were highlighted. These include:
- Pushing banks to digitalize and adopt fintech;
- Strengthening HK’s readiness for CBDCs through research;
- Enhancing and adding to the city’s existing data infrastructures;
- Increasing the fintech-savvy talent pool, and
- Formulating policies and exploring funding possibilities for fintech projects
CBDC readiness to be ‘future-proofed’
Startup Genome in their Global Fintech Ecosystem Report 2020 ranked Hong Kong’s fintech ecosystem eighth in the world, beating multiple contenders from Asia Pacific, Europe, and North America.
As decentralized finance such as cryptocurrencies looms threateningly over the heads of financial institutions across the world, central banks are starting to fight back, most notably by developing their own sovereign digital currencies, which would rely on well-developed fintech ecosystems.
Naturally, Hong Kong sought to explore the possibility of its own CBDC, with its eyes set on offering both wholesale and retail options. The HKMA will further research efforts to increase the city’s readiness for CBDCs. It has indicated its intention to work with the Bank of International Settlements (BIS) local Innovation Hub to research use cases, benefits, and risks of a retail CBDC.
Of note, too, is their intention to continue collaborating with China’s Digital Yuan trials, with a view to boost cross-border e-payments between the two entities.
