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HKMA picks solution provider for e-HKD pilot
CBDC to boost cross-border trade, investment, city’s long-term position as financial hub
The Asset 18 May 2023

The Hong Kong Monetary Authority (HKMA) has shortlisted a financial solution in a secured lending product backed by tokenized real assets for participation in the inaugural e-HKD Pilot Programme.

This proposed solution is led by Boston Consulting Group, HKT Payment and ZA Bank. They will be joined by paywith.glass and Venture Smart Financial Holdings as a consortium to collectively develop and evaluate this application, leveraging the potential programmability feature of e-HKD.

The consortium, the HKMA says, will bring together key players from various industry verticals to foster long-term e-HKD development, leveraging their collective cross-industry experience and ensuring a diverse range of perspectives. The initial focus will be on leveraging e-HKD’s potential features to empower new applications in a secured lending product, as part of the e-HKD Pilot Programme.

The programme is part of HKMA’s strategic three-rail approach to prepare for potential e-HKD implementation. Rail 1 focuses on establishing the necessary technological and legal foundations, while Rail 2, running concurrently with Rail 1, is aimed at conducting in-depth exploration of e-HKD use cases and addressing implementation and design issues. Rail 3 concerns the rollout of e-HKD.

“Central bank digital currencies (CBDCs), such as the e-HKD, will become an increasingly important use case of blockchain technology,” points out Paul McSheaffrey, senior banking partner, Hong Kong, KPMG China. “Central banks in Asia, in particular the HKMA and the People’s Bank of China, are leading the charge in trying out these new technologies.

“Within Hong Kong, given the wide range of payment options currently available, we would not expect this would have a significant impact on consumers in the short to medium term. However, the ability for cross-border trade and investment to be settled seamlessly using a CBDC, such as the e-HKD, will make these activities simpler, quicker and will help with Hong Kong’s position as a centre for trade and investment in the Asian region.”

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