Hong Kong has started taking baby steps towards issuing a central bank digital currency as it joins the growing list of countries studying the technical and strategic feasibility of the same.
The central bank of Hong Kong has published a technical whitepaper for the establishment of an e-HKD where it explains the challenges and the aspects that need to be studied more in the future so that such a CBDC becomes a reality. The introduction of a CBDC would need the cooperation of a lot of government departments along with businesses and the end-users as well and several aspects of the same have to be thoroughly studied as it would involve a disruption of the existing financial ecosystem, something that has not been attempted for several decades. While some of the central banks are ahead in the curve with countries like Nigeria going ahead with their introduction, several others are still in the learning and reporting stage only.
Eddie Yue, chief executive of the HKMA, says: “The white paper marks the first step of our technical exploration for the e-HKD. The knowledge gained from this research, together with the experience we acquired from other CBDC projects, would help inform further consideration and deliberation on the technical design of the e-HKD. We also look forward to receiving feedback and suggestions from academia and industry to enrich our perspectives.”
It is reported that the Hong Kong central bank is mainly looking into 7 areas which include privacy, interoperability, security, compliance, and resilience. This is likely to be the basis for analysis for central banks not only in Hong Kong but around the world. The technical feasibility is also under consideration as it is likely to be a big challenge and it is also learned that the central banks would like to develop such solutions themselves rather than use the existing solutions in the market due to issues concerning privacy. All such decisions need to be discussed with all the stakeholders before a decision can be made and this would need the cooperation of other countries as well due to the need to ensure interoperability with the system not only with the country but with systems established in other countries as well.