The Hong Kong Financial Authority (HKMA) stays undecided on making a coverage determination concerning the introduction of a retail central financial institution digital forex (CBDC) after concluding the primary pilot challenge of the e-HKD.
The HKMA famous that whereas CBDCs have the potential to supply distinctive advantages in sure areas, further analysis and investigation are obligatory to determine whether or not their implementation would considerably enhance the financial system
The HKMA added that CBDCs should not a cure-all for the inefficiencies discovered within the present system, as a lot of these issues stem from legacy processes that can not be fastened through know-how.
Challenge e-HKD
As a key a part of its “Fintech 2025” technique aimed toward advancing Hong Kong’s digital monetary infrastructure, the HKMA has been actively finding out the potential of wholesale and retail CBDCs.
The e-HKD Pilot Programme was launched in November 2022. The HKMA and business stakeholders collaboratively executed it to discover and consider the industrial feasibility of varied use instances for an e-HKD.
Part 1 of this system rigorously investigated potential home and retail use instances in six distinct classes: full-fledged funds, programmable funds, offline funds, tokenized deposits, settlement of Net 3 transactions, and settlement of tokenized property.
A complete of 16 corporations from the monetary, cost, and know-how sectors had been chosen to take part within the experiments.
As a key a part of its “Fintech 2025” technique aimed toward advancing Hong Kong’s digital monetary infrastructure, the HKMA has been actively finding out the potential of wholesale and retail CBDCs.
In response to the report, CBDCs have the potential to facilitate sooner, more cost effective, and extra inclusive transactions. Additionally they unlock new kinds of financial transactions.
Nevertheless, realizing such distinctive worth on a big scale is determined by market improvement and additional investigation. Moreover, some present inefficiencies are deeply rooted in longstanding enterprise norms and processes fairly than technological shortcomings.
Thus, whereas e-HKD holds the promise of leveraging new applied sciences, it might not be a panacea for all inefficiencies, the regulator wrote.
Additional investigation wanted
At current, the HKMA has not dedicated to a coverage determination in regards to the introduction and timing of an e-HKD, selecting to keep up a prudent stance.
The regulator added that any potential launch of a CBDC wants to contemplate the roles that the HKMA and the business would play in its implementation and operation. Moreover, issues concerning coverage, technical design, and authorized elements can be integral to any future developments on this regard.
The watchdog wrote that the primary part of the e-HKD Pilot Programme has recognized a number of areas that warrant additional research.
Within the upcoming phases of this system, the HKMA will delve deeper into these enterprise and implementation points, persevering with its exploration of the probabilities of a retail CBDC.
