The Hong Kong Monetary Authority (HKMA) has published a Technical Whitepaper to discuss the possibility of issuing digital Hong Kong Dollars (e-HKD) as part of its efforts to come up with an initial view on the prospects of its proposed Central Bank Digital Currency (CBDC) by the middle of next year.
The Whitepaper is part of the central bank’s anticipated “Fintech 2025” plan, emphasizing one strategic approach for strengthening CBDC research to future-proof Hong Kong’s CBDC preparedness.
The Whitepaper, according to the HKMA, looks at technological design possibilities for issuing and distributing retail CBDCs. The Whitepaper will be the first in a series of papers set to be issued to demonstrate a “technical architecture that includes a breakthrough privacy preservation arrangement that permits transaction traceability in a privacy-friendly manner,” according to the apex bank.
The HKMA’s Chief Executive, Eddie Yue, said:
“The Whitepaper marks the first step of our technical exploration for the 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. We also look forward to receiving feedback and suggestions from academia and industry to enrich our perspectives,”
The HKMA highlighted that further legal and legislative frameworks would need to be developed to underpin any affirmative decision to launch the CBDC. Thus no deadlines for when the e-HKD will be introduced have been set.
The race to establish a CBDC has been one of the main objectives for several Central Banks across the world in recent years. While the People’s Bank of China (PBoC) is leading retail trials of its Digital Renminbi (e-CNY) among the world’s major economies, American legislators are pressing the Federal Reserve to issue its consultation paper on a prospective Digital Dollar on a timetable.
With the CBDC competition heating up, the PBoC’s claims that digital fiat money will become a “new battlefield” among sovereign countries are more likely than ever to come true.