The Hong Kong Monetary Authority (HKMA) has started phase 2 of the e-HKD pilot program. The project’s scope has expanded from a focus on retail central bank digital currency (CBDC) to encompass tokenized deposits, so there’s a re-name to e-HKD+.
Eleven groups of firms are exploring use cases, including the settlement of tokenized assets, programmability and offline payments. As part of the project, the firms will explore the commercial viability of potentially making available these new forms of digital money to individuals and corporates. Both technical and legal aspects will be explored.
While the HKMA didn’t mention Project Ensemble in the announcement, it is also exploring tokenized deposits where a wholesale CBDC is used for interbank settlement and institutional settlement of tokenized assets. By contrast, the e-HKD focus is on settlement for corporates and individuals.
The HKMA plans to create an e-HKD Industry Forum and participants will test their use cases as part of the e-HKD sandbox. That means the HKMA has the e-HKD sandbox for CBDC and tokenized deposits, as well as the separate stablecoin sandbox. Additionally, there’s the Project Ensemble sandbox for institutional use cases of wholesale CBDC.
“Project e-HKD+ signifies the HKMA’s commitment to digital money innovation,” said Mr Eddie Yue, CEO of the HKMA. “The HKMA will continue to adopt a use-case driven approach in its exploration of digital money.”
CBDC, tokenized deposit use cases
On that point, the use cases will include (abbreviated):
Settlement of tokenized assets
- Hang Seng Bank, Aptos Lab, Boston Consulting Group (BCG): settlement of tokenized funds on public blockchain
- HSBC: explore permissioned protocols for public blockchain payments while addressing privacy
- Standard Chartered, BlackRock, Mastercard, Libeara: tokenized fund transactions settled with tokenized money
- Visa, ANZ, Fidelity and ChinaAMC: Australian corporate investors pay (using DvP) with tokenized deposits and e-HKD for Hong Kong tokenized fund units.
Programmability
- Bank of China (Hong Kong), Sanfield (Management) construction consortium: funding and prepayments
- China Construction Bank (Asia): assess different blockchain designs for programmable payments
- DBS: purpose bound money and ESG rewards
- Hang Seng Bank: an open digital rewards platform
- Mastercard, Kasikornbank (KBank) and Airstar Bank: digital money for domestic and international trade finance
Offline payments
- Bank of Communications (Hong Kong) and China Mobile (Hong Kong): offline payments using mobile SIM card
- ICBC (Asia): anonymous e-HKD wallet and dual offline payments.
A full version of the use cases is available on the HKMA website.
Ledger Insights Research has published a report on bank-issued stablecoins and tokenized deposits featuring more than 70 projects. Find out more here.
