Hong Kong Launches Second Phase of e-HKD Pilot Program

The Hong Kong Monetary Authority (HKMA) has initiated the second phase of its pioneering e-Hong Kong dollar (e-HKD) pilot program.

Announced on March 14, this phase aims to delve into the digital Hong Kong dollar's potential.

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With this phase, the HKMA will build on the first phase's findings by examining the benefits of new technologies such as programmability, tokenization, and atomic settlements, as well as explore innovative use cases that were not previously addressed.

With a deadline set for May 17 for applications, the HKMA has opened the door for market participants to contribute to this cutting-edge project, which is expected to extend until mid-2025. This timeframe grants participants ample opportunity to develop, test, and refine their proposed digital currency applications.

In guiding potential participants, the HKMA has outlined several criteria for application evaluation. Proposals will be judged on their innovation, potential impact on consumer experiences, readiness for market testing, regulatory compliance, and the ability to enhance the utilization of e-HKD within Hong Kong.

The Central Bank Digital Currency (CBDC) project is a key component of Hong Kong's ambitious "Fintech 2025" strategy, announced in 2021. The research period began in 2017, aiming to understand the "benefits and potential applications" of CBDCs.

Currently, the authority is intensifying its efforts to prepare Hong Kong for the issuance of CBDCs at both wholesale and retail levels.

As the pilot progresses, Hong Kong solidifies its position as a global leader in fintech innovation, moving closer to achieving its "Fintech 2025" vision.

Hong Kong has also recently launched the Project Ensemble to explore the development of a wholesale central bank digital currency (wCBDC) to facilitate tokenization.

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