The Hong Kong Monetary Authority (HKMA) announced it is working on developments for a central bank digital currency (CBDC) at both the wholesale and retail levels.

The HKMA announced work on a retail CBDC with the Bank for International Settlements (BIS) Innovation Hub Hong Kong Center. The continued work is expected to include a study on a retail CBDC’s use cases, benefits, and related risks.

In addition to this work, the HKMA said it would continue its effort on a wholesale CBDC as well. Bloomberg reported that this exploration of issuing a digital currency would last over the next 12 months. “This is essentially a research study similar to what is being undertaken by many other jurisdictions,” Bloomberg quotes the HKMA as saying. This study will look at consumer needs, data privacy, anti-money laundering requirements, in addition to other legal and policy considerations.

Continued work on e-CNY

Besides its own CBDCs, the HKMA also remarked on its continued collaboration with the People’s Bank of China. The HKMA is supporting technical testing for China’s digital yuan (e-CNY) with its domestic payments network. This latest trial will explore how Hong Kong residents can top up an e-CNY digital wallet. Hong Kong residents currently use the system to make domestic payments via mobile phones. The work hopes to provide a convenient means of cross-boundary payments for both domestic and mainland residents. 

“This will help Hong Kong residents to use e-CNY when they cross the border,” Reuters quotes Nelson Chow, chief fintech officer of the Hong Kong Monetary Authority, as saying. This is the second stage of such experiments between the PBOC and the KHMA.

Previous cross-border study

Last year the HKMA awarded ConsenSys a cross-border payment network study project. The project involved the development of a technology for a CBDC cross-border payment network. 

In that instance, the project arose from a Memorandum of Understanding between HKMA and the Bank of Thailand (BOT). The goal was to examine the deployment of Distributed Ledger technology (DLT) in cross-border transactions. This involved bypassing corresponding banking networks, which would enable direct payments between banks.