- The authorities were initially skeptical about the feasibility of implementing CBDC.
- The move taken by the HKMA is in accordance with a global trend.
The Hong Kong Monetary Authority (HKMA) said on Friday (June 9) that it would begin building a central bank digital currency (CBDC) for use in retail transactions in the coming months. The Hong Kong Monetary Authority (HKMA) has reportedly been studying the feasibility of creating a digital Hong Kong dollar (e-HKD) since 2017.
The authorities were initially skeptical about the feasibility of implementing a retail digital currency, but recent research and responses from two rounds of market consultation have changed things.
According to the report, the HKMA would begin its actions to provide the groundwork for the implementation and practical uses of a retail CBDC by conducting research and launching trial programs.
In Accordance With Global Trend
In addition, the move taken by the HKMA is in accordance with a global trend in which national central banks are examining digital versions of their sovereign currencies, including the designs of these iterations as well as potential uses for them.
It has been stated that the Bank for International Settlements (BIS) has emphasized the necessity to research the implications of digitalization on financial institutions in order to ensure continued stability in a world that is always shifting and evolving.
HKMA’s report mentioned:
“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.”
There were rumblings back in April that the Hong Kong regulator was considering letting private banks manage the implementation of the e-HKD and creating it on a permissioned blockchain.
Despite a recommendation from the HKMA study to investigate blockchain solutions for the e-HKD, the regulator said on Friday that it will take into account “various factors,” including policy objectives and the actions of other jurisdictions, as it continues to look into technical possibilities.