Hong Kong Monetary Authority (HKMA) has divulged its plans to lay the foundation for implementing a retail central bank digital currency (CBDC). The decision comes after extensive research and feedback gathered through two rounds of market consultation, leading the HKMA to conclude that initiating the groundwork for a potential future implementation is necessary.
“The HKMA will therefore start work to lay the foundations for, and conduct in-depth studies and pilots on, the implementation and application of” such a currency, the report said.
Central banks around the world are increasingly exploring design options and applications for digital versions of sovereign currencies, with the Bank for International Settlements that groups monetary authorities having signaled the importance of investigating the digitalization of financial systems to maintain stability.
The report said that to explore the execution and practical applications of a retail CBDC, the HKMA will reportedly commence its activities to establish the necessary foundations, conduct studies, and initiate pilot programs.
“While it appears that e-HKD might not have an imminent role to play in the current retail payment market, we believe prospective use cases for e-HKD can emerge quickly out of the rapid evolution, or even revolution, in the digital economy,” HKMA’s report further said,
Meanwhile, respondents in HKMA’s study proposed the exploration of blockchain solutions for the e-HKD, the regulator said in its recent report that it will be considering various factors from policy objectives to measures adopted by other jurisdictions “and further explore technically feasible solutions on this subject matter.”