Hong Kong Officially Published Its CBDC Whitepaper

The Hong Kong Monetary Authority (HKMA) just released its technical whitepaper for its digital Hong Kong dollar (e-HKD). The paper, dubbed “e-HKD: A technical perspective”, explores the possible architectures and design options for developing and deploying infrastructure for a digital Hong Kong dollar.

One of the key aspects in the whitepaper is overcoming the problems of cross-ledger synchronization, over-issuance prevention, privacy-preserving transaction traceability, and flexible instantiations of different two-tier distributions models.

“The architecture proposed in this whitepaper is most notable for its ability to flexibly and efficiently instantiate different two-tier distribution models of rCBDC while achieving breakthroughs in privacy-preserving transaction traceability and cross-ledger synchronization of decoupled ledgers.” the report reads.

This is the final stage of preparation for an e-HKD launch. HKMA’s CBDC development plans began in 2017 with the project LionRock, in corporation with the Bank of Thailand (BOT).

In 2019, the project evolved into Inthanon-LionRock, which aims to showcase the possible usage of wholesale CBDC for cross-border payments.

In June 2021, the Hong Kong Monetary Authority pushed its CBDC project even further, commencing Project e-HKD, which is more of a retail-oriented CBDC.

The “e-HKD: A technical perspective” whitepaper was jointly developed with the Hong Kong Centre of the BIS Innovation Hub. Furthermore, the HKMA introduced the “Fintech 2025” strategy with one of its key focuses was strengthened research work on CBDCs.

“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. We also look forward to receiving feedback and suggestions from the academia and industry to enrich our perspectives.” Eddie Yue, chief executive of the HKMA, noted, adding that the move represents a significant step towards launching a future digital e-HKD.

The e-HKD technical whitepaper puts Hong Kong on the CBDC map, alongside China, Japan, Sweden, and several other countries. China, however, is pushing its crypto-friendly stance only towards its own DC-EP stablecoin, while imposing a widespread ban on crypto trading in mainland China.

The central banks did not give a timeframe for launching their upcoming CBDC for real transactions. However, they vowed to continue working on the joint project and even add more countries to the Project Inthanon-LionRock.