Hong Kong Financial Authority Releases CBDC Whitepaper to Examine Prospect of e-HKD

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Hong Kong’s Financial Authority, its de facto central financial institution, has launched a whitepaper on retail central financial institution digital currencies (CBDCs) whereas it continues to discover the potential of a digital Hong Kong greenback (e-HKD) for its home and cross-border markets.

The white paper was revealed Monday by the Hong Kong Financial Authority (HKMA), which is the de-facto central financial institution of the town who’s official title is the Hong Kong Particular Administration of the Folks’s Republic of China.“

Beneath the “One Nation, Two Programs” framework underneath which Hong Kong is ruled, Hong Kong maintains its personal monetary and judicial techniques, amongst others, individually from the Chinese language mainland.

The paper, titled “e-HKD: A technical perspective,” explores potential architectures and design choices because it pertains to the development of the infrastructure for distributing e-HKD.

“The information gained from this analysis, along with the expertise we acquired from different CBDC tasks, would assist inform additional consideration and deliberation on the technical design of the e-HKD,” HKMA Chief Government Eddie Yue mentioned in a press launch on Monday.

The financial institution mentioned its whitepaper is “the primary” amongst related papers revealed by central banks that particulars transaction traceability whereas preserving privateness as a key technical characteristic.

“The structure proposed on this whitepaper is most notable for its capacity to flexibly and effectively instantiate totally different two-tier distribution fashions of rCBDC whereas attaining breakthroughs in privacy-preserving transaction traceability and cross-ledger synchronization of decoupled ledgers,” the authority mentioned in its paper.

HKMA’s analysis consisted of seven main areas of concern which analyzed the advantages and shortcomings of CBDCs as they apply to privateness, interoperability, scalability and efficiency, cybersecurity, compliance, operational robustness and resilience in addition to their technology-enabled purposeful capabilities.

Beneath Undertaking LionRock in 2017, the HKMA started researching CBDCs and says it has since “actively collaborated” with different central banks in broadening its information of wholesale CBDCs.

The paper additionally examined 4 main distribution fashions together with a “variant of direct CBDC mannequin,” a “hybrid mannequin,” an “intermediated mannequin,” and “CBDC-backed e-money.”

The financial institution mentioned it’s in search of opinions from educational and business consultants by 12 months’s finish underneath a proper request for a remark doc. HKMA additionally underscored its intent behind its analysis was to gather views, to not push forward with infrastructure growth at this stage.

“It ought to be famous that the proposed structure just isn’t a blueprint for e-HKD, nor does it method a choice on the CBDC distribution fashions chosen for implementing e-HKD”, the financial institution mentioned. “Recommendations and concepts of higher designs are additionally solicited.”

Learn extra: BIS and Hong Kong Financial Authority to Experiment With Tokenized Inexperienced Bonds

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