Hong Kong plans to expand the pilot scope of e-CNY, China’s central bank digital currency (CBDC) under trial, to improve the efficiency of cross-border payments, according to the government’s latest budget.
Paul Chan, Hong Kong’s financial secretary, said in his budget speech On Wednesday, the government plans to expand pilot testing of the digital yuan so that more Hong Kong residents can top up their e-CNY wallets through the existing local “faster payment system” (FPS).
FPS is a real-time payment settlement system that allows users to make interbank e-wallet payments by entering the recipient’s mobile number or email address.
The Hong Kong Monetary Authority, Hong Kong’s de facto central bank, completed the first pilot phase of its CBDC, e-HKD, in October 2023, and has been “studying domestic retail use cases in various areas such as programmable payments, offline payments”. and symbolic deposits,” according to Chan. The HKMA plans to “soon begin” the second phase of its e-HKD pilot project.
A multi-CBDC platform
The HKMA also participated in the mBridge CBDC project, with the first phase of its service expected to launch this year, according to the budget speech. THE mBridge Project is launched by the Bank for International Settlements, the HKMA and the central banks of China, Thailand and the UAE to pilot a common multi-CBDC platform for wholesale cross-border payments.
Meanwhile, Hong Kong issued the second batch of tokenized green bonds earlier this month after issuing the first batch in February 2023, Chan added. It is “the world’s first ever multi-currency tokenized bond issuance” and has attracted “massive subscription” from global institutional investors, including asset managers, insurance companies, private banks and non-financial businesses, he said.
Chan also noted that Hong Kong was considering soon deploy a sandbox for those who wish to issue stablecoins. In December, the Financial Services and Treasury Office and the HKMA jointly launched a consultation – until February 29 – on the regulation of stablecoin issuers. They proposed that all issuers of fiat-referenced stablecoins obtain a license from the HKMA.
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