HKMA announces start of e-HKD pilot program

The Hong Kong Monetary Authority (HKMA) today (May 18) announced the commencement of the e-HKD Pilot Programme. A total of 16 firms from the financial, payment and technology sectors have been selected to participate in the first round of pilots for 2023. 

The pilots will take deep dives into potential use cases in six categories, including full-fledged payments, programmable payments, offline payments, tokenised deposits, settlement of Web3 transactions and settlement of tokenised assets.

The e-HKD Pilot Programme is a key component of Rail 2 under the HKMA's three-rail approach in paving the way for the possible implementation of a retail central bank digital currency (CBDC), i.e. e-HKD, in the future. Under the Pilot Programme, the HKMA will conduct a series of pilots in close collaboration with various stakeholders to examine the use cases, as well as implementation and design issues relating to e-HKD.

The commencement event was attended by senior executives from the 16 selected firms. During the event, the firms took the opportunity to present the key highlights of their proposed use cases. In the next few months, the HKMA will closely engage with the selected firms in conducting the pilots and monitoring the progress. While the actual outcome and results of the pilots may evolve over time, the HKMA said it aims to share the key learnings with the public at Hong Kong FinTech Week 2023, with more rounds of pilots with the industry coming in the future.

To facilitate collaboration between the government, industry and academia on CBDC research, the HKMA also plans to establish a CBDC Expert Group. The Expert Group will comprise leading academics from local universities who will contribute valuable insights to support Hong Kong's future exploration on key policy and technical issues surrounding CBDC, such as privacy protection, cybersecurity and interoperability, it said.

The Chief Executive of the HKMA, Mr Eddie Yue, said, "While the HKMA has not yet made a decision on whether and when to introduce e-HKD, we are excited to kick-start the e-HKD Pilot Programme, which serves as a tremendous opportunity for the HKMA to collaborate with the industry in exploring innovative use cases and maximising our readiness for a potential e-HKD. By fostering government-industry-academia collaboration in CBDC research, we aim to ensure the relevance of our research and development efforts, and enable the translation of such outcomes into viable business opportunities."