Today at a fintech event, Eddie Yue, Hong Kong Monetary Authority CEO, outlined its new Fintech 2025 strategy. Central bank digital currencies (CBDC) form the second piece of a five part strategy. And the HKMA confirmed plans to explore a retail Hong Kong dollar or e-HKD in addition to supporting the use of China’s digital yuan.
The monetary authority aims to continue its existing work on wholesale CBDC. In 2019 it starter collaborating with the Bank of Thailand on the Inthanon – LionRock project for cross border payments and released results in 2020. More recently, the People’s Bank of China and the UAE’s central bank joined the initiative along with the BIS, which published a paper on potential multi-CBDC (M-CBDC) models.
That’s already well documented. But today Yue said the HKMA has been working with the BIS exploring retail CBDC and “will begin a study on e-HKD to understand its use cases, benefits, and related risks.”
It will also continue its work with the People’s Bank of China on the digital yuan or e-CNY. These involve two-way tests. We previously reported that the Luoho district of Shenzhen tested allowing Hong Kong residents to sign up for the e-CNY for use when visiting the mainland.
In late 2020 Yue noted the potential digital yuan use for cross border payments and the fact that the renminbi is already used in Hong Kong, so the e-CNY would just be an extension of that. Today it was stated that the e-CNY would be trialed in Hong Kong “with a view to providing a convenient means of cross-boundary payments for both domestic and mainland residents.”
Meanwhile, this month, the digital yuan mainland trials will pass the two million mark regarding the number of consumers who have participated in trials.