The Hong Kong Monetary Authority (HKMA) is stepping up its efforts in the research of a central bank digital currency. While announcing a roadmap that seeks to strengthen the region’s fintech sector, the HKMA revealed it has been collaborating with local and global bodies in its CBDC research. The roadmap comes at a time when Hong Kong is working on integrating China’s digital yuan with its domestic payments network.
Dubbed ‘Fintech 2025,’ the roadmap aims to drive financial technology development in the autonomous region. The Hong Kong central bank aims to encourage “all banks to go fintech.” Aside from working to implement more enabling regulations, the watchdog pledged to identify underdeveloped fintech areas in the coming years and render its support to uplift them.
In line with fintech development, the HKMA wants to kick up its CBDC research a notch. “The HKMA will strengthen its research work to increase Hong Kong’s readiness in issuing CBDCs at both wholesale and retail levels,” Eddie Yue, the HKMA chief executive, said in a recent seminar.
Yue revealed that the HKMA has been working with the Bank for International Settlements’ Innovation Hub “to research retail CBDCs and will begin a study on e-HKD to understand its use cases, benefits, and related risks.”
He added, “The HKMA will also continue to collaborate with the People’s Bank of China in supporting the technical testing of e-CNY in Hong Kong with a view to providing a convenient means of cross-boundary payments for both domestic and mainland residents.”
Hong Kong has been collaborating with the PBoC for quite some time now on the digital yuan project. And now, according to a Reuters report, Hong Kong is working to integrate the digital yuan into its domestic payments network. This progress is remarkable, especially since even China has yet to integrate the digital yuan fully and is only conducting limited trials.
Addressing the media, HKMA officials revealed that they are specifically targeting integrating the digital yuan with the faster payments system. This system allows residents to make domestic payments via mobile phones and would be used to top up the digital yuan wallets.
“This will help Hong Kong residents to use e-CNY when they cross the border,” HKMA’s chief fintech officer Nelson Chow told a media briefing this week.
Yue added, “People are now a lot more used to digital payments, and if other central banks are exploring possible use cases for CBDCs… you have to try out to see whether you can make it successful.”