Research into central bank digital currencies will play a significant role in Hong Kong’s fintech development efforts.
The Hong Kong Monetary Authority (HKMA) has published its “Fintech 2025” strategy with central bank digital currencies (CBDC), both retail and wholesale, included in the digital finance innovation package.
Unveiling the fintech strategy via a release issued on Tuesday, CBDCs will reportedly play a part in the city administration’s goal of promoting comprehensive digital finance adoption by 2025.
Concerning its plans for central bank digital currencies, the HKMA revealed that it would increase its research efforts to ensure Hong Kong’s readiness to float both retail and wholesale CBDCs.
According to the announcement, the HKMA is collaborating with the Bank for International Settlement to research a retail digital Hong Kong dollar currency. This research is reportedly examining risks, benefits and potential use cases of an e-HKD currency.
The HKMA also stated that it will continue to work with China’s central bank on cross-border utilization of the latter’s digital currency electronic payment (DCEP) project. Indeed, Cointelegraph reported back in May that Hong Kong was looking to expand pilot studies for the PBoC’s digital yuan.
Meanwhile, the HKMA is also part of a consortium of Asian central banks working on a multiple central bank digital currency bridge. The project builds upon a similar collaboration between Hong Kong and Thailand to create cross-border CBDCs based on decentralized ledger technology.
The expanded CBDC research plan is one of five major focus points in Hong Kong’s fintech strategy. Other areas include ensuring the city’s banks embrace digital finance technology while creating a robust data infrastructure to support the planned fintech expansion.
Hong Kong also wants to support its comprehensive fintech overhaul with government-led policies while also laying the groundwork to develop a skilled workforce for the new digital finance paradigm.
Amid the backdrop of its expanded fintech focus, Hong Kong is also moving to restrict access to cryptocurrencies. The city’s Financial Services and Treasury Bureau issued a policy proposal back in May calling for the government to restrict crypto trading to qualified investors with portfolios worth at least $1 million.