Hong Kong’s Monetary Authority, its de facto central bank, has released a whitepaper on retail central bank digital currencies (CBDCs) while it continues to explore the potential of a digital Hong Kong dollar (e-HKD) for its domestic and cross-border markets.
The white paper was published Monday by the Hong Kong Monetary Authority (HKMA), which is the de-facto central bank of the city who’s official title is the Hong Kong Special Administration of the People’s Republic of China.“
Under the “One Country, Two Systems” framework under which Hong Kong is governed, Hong Kong maintains its own financial and judicial systems, among others, separately from the Chinese mainland.
The paper, titled “e-HKD: A technical perspective,” explores potential architectures and design options as it relates to the construction of the infrastructure for distributing e-HKD.
“The knowledge gained from this research, together with the experience we acquired from other CBDC projects, would help inform further consideration and deliberation on the technical design of the e-HKD,” HKMA Chief Executive Eddie Yue said in a press release on Monday.
The bank said its whitepaper is “the first” among similar papers published by central banks that details transaction traceability while preserving privacy as a key technical feature.
“The architecture proposed in this whitepaper is most notable for its ability to flexibly and efficiently instantiate different two-tier distribution models of rCBDC while achieving breakthroughs in privacy-preserving transaction traceability and cross-ledger synchronization of decoupled ledgers,” the authority said in its paper.
HKMA’s research consisted of seven major areas of concern which analyzed the benefits and shortcomings of CBDCs as they apply to privacy, interoperability, scalability and performance, cybersecurity, compliance, operational robustness and resilience as well as their technology-enabled functional capabilities.