In Brief:
- Hong Kong’s central bank published whitepaper for digital currency
- A technical whitepaper explains possible architectures and design options for CBDC.
- HKMA has started researching on retail CBDC under the project named e-HKD
As part of the HKMA’s main mandate to promote the development of more retail-focused central bank digital currencies (CBDC), a white paper was recently published exploring the potential of the digital Hong Kong dollar (e-HKD).
A technology experimentation study for Project e-HKD has produced this whitepaper. The paper explores possible architectures and design options that could be used to build the infrastructure that distributes e-HKD
The study aims to explore technology solutions that address the problems of cross-ledger synchronisation, over-issuance prevention, privacy-preserving transaction traceability, and flexible instantiations of different two-tier distributions models.
The architecture proposed in this whitepaper ensures that rCBDCs can be deployed in a flexible and efficient manner, allowing for breakthroughs in transaction traceability while preserving privacy.
The proposed architecture consists of two layers: a wholesale system for issuing and redeeming CBDC, and a retail system for distributing and circulating either rCBDCs or CBDC-backed e-money.
In designing the architecture, three key principles were taken into account: safety, efficiency, and openness to change, innovation, and competition.
Also Read: Federal Court of Nigeria Approves eNaira CBDC Rollout
The HKMA began researching CBDC under Project LionRock in 2017, and has since then actively collaborated with other central banks in broadening our knowledge of wholesale CBDC.
Addition to that, the HKMA and the Bank of Thailand (BOT) jointly initiated Project Inthanon LionRock in 2019 to study the cross-border payment potential of wholesale CBDCs.
In February 2021, when the Central Bank of the United Arab Emirates and the Digital Currency Institute of the People’s Bank of China (PBoC) joined the project, it was renamed Multiple CBDC Bridge (mBridge).
