Hong Kong Monetary Authority (HKMA) has said it will start laying the foundation to implement a retail central bank digital currency in a report published on Friday.
Hong Kong Monetary Authority to Prepare for Retail CBDC
In a report published on Friday, the Hong Kong Monetary Authority (HKMA) announced its intention to initiate the groundwork for implementing a retail central bank digital currency (CBDC).
While the HKMA had been examining the possibility of a digital version of the Hong Kong dollar, known as “e-HKD,” since 2017, recent market consultations and studies have convinced the HKMA that it is necessary to begin preparing for potential future implementation of a retail CBDC.
The report stated that the HKMA would commence efforts to establish the necessary foundations and undertake extensive research and pilot projects to explore the implementation and practical applications of such a digital currency.
This move aligns with the global trend of central banks exploring digital currency designs and applications to ensure financial system stability, as emphasized by the Bank for International Settlements.
Although the immediate role of e-HKD in the current retail payment market may not be prominent, the report highlighted the potential for rapid emergence of use cases for e-HKD within the evolving digital economy.
While blockchain solutions were suggested by respondents in the HKMA’s study, the regulator clarified in the recent report that it would consider various factors, including policy objectives and measures adopted by other jurisdictions, as it further explores technically feasible solutions for the e-HKD.
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