Hong Kong’s CBDC Whitepaper is Out

The Hong Kong Monetary Authority has released a 50-page technical whitepaper on its future retail CBDC in collaboration with the BISIH Hong Kong Centre.

This document investigates potential architectures and design choices for the CBDC and its distribution. The expanded research on CBDCs began in June 2021 as part of the strategy ‘Fintech 2025,’ which aimed to modernize Hong Kong’s current economic system.

The HKMA announced Fintech 2025 in June of this year, a financial technology initiative focused on five areas of innovation, including offering support to central banks in adopting a CBDC, developing a skilled workforce, and the initiative introduced today. Chief executive of HKMA Eddie Yue said:

“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 examines and explores ways to issue retail CBDC in Hong Kong and expand collaboration with central banks on global CBDC implementation. The first version of e-HKD will probably appear later this year.

The published whitepaper discusses the research methodology and the technical implementation of the financial solution. This is also one of the first technical documents issued by central banks to reveal how CBDC will work; according to the document, the e-HKD will combine privacy preservation, allowing transaction traceability in a privacy-friendly way.

The HKMA is also investigating several issues related to CBDC implementation as part of this research. According to the HKMA’s chief executive, the whitepaper is only the first tread in the technical analysis of e-HKD.

Besides their research, the HKMA is looking into the experience of other countries and central banks that are generating their own CBDC solutions. Thus, the company is open to receiving industry evaluations and suggestions.