Thus, according to the press release, the document is part of a research paper on the technical aspects of CBDC. The regulator recalled that in June 2021 it announced the Fintech 2025 strategy. One of the main directions of which is the study of digital currency in terms of readiness for its implementation.
In addition to working with other central banks on the cross-border use of CBDC, the Office has begun to study the prospects for the issuance of retail digital currency in Hong Kong (e-HKD). HKMA’s partner is the Hong Kong BIS Innovation Hub Center.
The white paper
In the white paper, the regulator revealed potential technical design options for the release and distribution of retail CBDCs. And presented an architecture that includes “an innovative mechanism for maintaining transaction confidentiality.”
The HKMA assumes a two-tier system for such assets: a wholesale layer for the issuance and repayment of CBDC by the central bank; and a retail layer for distribution by commercial institutions in the form of digital money.
The Office in the document also listed a number of issues for further study of the digital currency. On which it turned to scientific and industry experts to collect opinions and comments.
“The white paper marks the first step in our technical research for e-HKD. The knowledge gained as a result of this work. Together with the experience we have gained in other CBDC projects, will help justify further consideration and discussion of e-HKD,” said Eddie Yue, the Chief Executive of HKMA.
Recall that BIS, in a joint study with a group of central banks, came to the conclusion that public and private sector cooperation is necessary for the effectiveness of CBDC.
Based on the results obtained during the mBridge (formerly Inthanon-LionRock) project, the institution’s specialists stated that the use of digital currencies in cross-border payments can reduce the transaction time to seconds and reduce their cost by 50%.