Expansion of e-HKD CBDC project in Hong Kong now encompasses tokenized bank deposits, with BlackRock participating.
In a significant step towards digital currency innovation, the Hong Kong Monetary Authority (HKMA) has initiated the second phase of its e-HKD pilot program, now rebranded as e-HKD+. The expanded program, led by HSBC, aims to explore the feasibility of a central bank digital currency (CBDC) version of the Hong Kong dollar [1].
## Blockchain Experiments and Technical Feasibility
The e-HKD+ pilot program will test digital Hong Kong dollar (e-HKD) transactions across various blockchain networks, including Arbitrum, Ethereum, Linea, Polygon, and a private DLT system using Hyperledger Besu [1][3][5]. The initiative assesses the technical and commercial viability of issuing a CBDC by evaluating performance, scalability, and security across different digital environments [1][3].
Privacy and security are key priorities, with the program focusing on privacy-enhancing technologies (PET) and decentralized identity (DID) systems to maintain user privacy and ensure compliance standards [1][3].
## Use Cases
The pilot program is exploring multiple use cases for e-HKD, including tokenized deposits and settlements, programmability, and offline payments [1][3]. While offline payment capabilities are not explicitly highlighted, the broader context of CBDC research often includes solutions for offline or low-connectivity scenarios [2].
The use of programmable blockchain environments suggests potential for programmable smart contracts that could automate various financial processes related to e-HKD transactions.
## Collaborative Efforts
Several financial institutions are participating in the e-HKD+ project. HSBC is investigating permissioned protocols for public blockchain payments while addressing privacy concerns. Hang Seng Bank, Aptos Lab, and the Boston Consulting Group (BCG) are exploring settlement of tokenized funds on public blockchain. Mastercard, Kasikornbank (KBank) and Airstar Bank are working on digital money for domestic and international trade finance [1].
ICBC (Asia) is creating an anonymous e-HKD wallet and dual offline payments, while China Construction Bank (Asia) is assessing different blockchain designs for programmable payments. Bank of China (Hong Kong), Sanfield (Management) construction consortium are focusing on funding and prepayments. Standard Chartered, BlackRock, Mastercard, Libeara are conducting tokenized fund transactions settled with tokenized money [1]. Bank of Communications (Hong Kong) and China Mobile (Hong Kong) are developing offline payments using mobile SIM card technology [1].
Visa, ANZ, Fidelity, and ChinaAMC are facilitating Australian corporate investors to pay with tokenized deposits and e-HKD for Hong Kong tokenized fund units [1].
## Industry Forum and Future Applications
The HKMA plans to establish an e-HKD Industry Forum, where participants will test their use cases as part of the e-HKD sandbox. This move signifies the HKMA's commitment to digital money innovation, as stated by Eddie Yue, CEO of the HKMA [1].
The e-HKD+ pilot program is designed to advance Hong Kong's fintech and digital currency landscape by integrating blockchain technology with traditional financial systems, enhancing privacy and security, and exploring future applications of CBDCs. The HKMA will continue to adopt a use-case driven approach in its exploration of digital money.
[1] - South China Morning Post [2] - The Block [3] - Coindesk [4] - Finextra [5] - Cointelegraph
- The e-HKD+ pilot program, spearheaded by HSBC, is exploring the technical viability of a CBDC version of the Hong Kong dollar across various blockchain networks like Arbitrum, Ethereum, Linea, Polygon, and a private DLT system using Hyperledger Besu.
- To maintain user privacy and ensure compliance standards, the program focuses on privacy-enhancing technologies (PET) and decentralized identity (DID) systems.
- The pilot program is investigating multiple use cases for e-HKD, such as tokenized deposits and settlements, programmability, and offline payments, although offline payment capabilities are not explicitly highlighted.
- Collaborative efforts in the e-HKD+ project include HSBC investigating permissioned protocols for public blockchain payments, Hang Seng Bank, Aptos Lab, and BCG exploring settlement of tokenized funds, and numerous other financial institutions working on digital money for trade finance, anonymous e-HKD wallets, programmable payments, and offline payments.
- In the future, the HKMA plans to establish an e-HKD Industry Forum, inviting participants to test their use cases within the e-HKD sandbox, with the aim of advancing Hong Kong's fintech and digital currency landscape.
- The e-HKD+ pilot program intends to integrate blockchain technology with traditional financial systems, enhance privacy and security, and explore future applications of CBDCs with a use-case driven approach.
