The Hong Kong Monetary Authority (HKMA) has established an expert group of academics for central bank digital currency (CBDC) research. The 12 members come from several local university faculties, including business, computer science, economics, finance, and law. They will play a key role in supporting the HKMA’s exploration of policy and technical issues surrounding its eHKD digital currency.
The group has already commenced work on two research papers. The first paper examines privacy-enhancing technologies, and the second discusses the potential for interoperability (compatibility across blockchain networks).
Previous CBDC research already highlighted the potential for privacy-enhancing technologies (PETs) that enable the selective disclosure of information. This could facilitate transaction traceability and account verification without compromising the privacy of individuals.
We’d imagine PETs could be used for CBDC in multi level supply chain finance and payments. In that case, manufacturing sub contractors wish to maintain the anonymity of their suppliers to protect their market share from vertical integration by their client, the primary manufacturer.
The HKMA may also pursue the option to make the CBDC interoperable with various blockchain networks. This could enhance user convenience for both merchants and consumers and promote widespread adoption. The Reserve Bank of Australia recently completed trials for this feature.
CBDC expert groups in other jurisdictions
Both the UK and EU have also established expert groups to examine the advantages and functionalities of a CBDC. The Bank of England established CBDC engagement and technology forums, including participants from financial institutions, merchants, businesses and consumers. The EU created a market advisory group of business professionals and financial experts.
Although the Hong Kong group is only made up of academics, the HKMA will explore the demands and challenges of widespread CBDC implementation through industry trials. Some participants already announced the results of several eHKD pilots.
Meanwhile, the HKMA is also involved with the mBridge project to enable cross-border interbank settlements using CBDCs. It involves the Bank for International Settlements and the central banks of China, Thailand and the UAE.
