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Hong Kong takes first step towards central bank digital currency

Hong Kong’s central bank has published a technical whitepaper for a potential retail digital currency

Hong Kong has taken its first steps to discover the world of central bank digital currency (CBDC) and it also released a technical whitepaper for a potential retail digital currency, according to media reports.

The paper explains the prospect of issuing retail CBDC in Hong Kong and it also covers technical and policy considerations. The paper plans on coming up with an initial view by the second half of 2022.

The Hong Kong Monetary Authority (HKMA) is yet to decide whether to issue the retail CBDC but has started researching it under the project named e-HKD. The technical whitepaper is a part of that research and the HKMA wants to begin a dialogue through it on the design of e-KHD and evaluate its benefits and risks.

Eddie Yue, CEO of the HKMA told the media, “The whitepaper 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.”

The HKMA also plans to reach out to academics and industry experts alike to identify and resolve up to seven major policy areas that have come up during the research, namely; privacy issues, interoperability, performance and scalability, cybersecurity, compliance, resilience, and technological capabilities.

HKMA is also jointly investigating with the Hong Kong centre of the BIS Innovation Hub on a document that explores potential technical design options for issuing and distributing retail CBDCs. It also includes an arrangement that allows transaction traceability in a privacy-amicable manner.

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