With the advance of blockchain technology, the concept of a central bank digital currency has risen to prominence in recent years, spurring discussions and research globally. The Hong Kong Monetary Authority , the city’s de facto central bank, has been exploring the idea of a digital Hong Kong dollar since as early as 2017. Hong Kong officially entered the CBDC race in 2021 by announcing the research for the e-HKD, essentially the digital form of the Hong Kong dollar.
In developing the e-HKD, HKMA has adopted a three-rail approach, where the first rail focuses on foundational layer development and the second rail on pilot programs. These are expected to converge into the third rail, which entails the actual launch of the e-HKD.
The pilot program’s second phase started in March 2024, after successfully completing the first stage. The second phase, expected to last until mid-2025, intends to delve deeper into the results from the first phase, focusing on areas including programmability, tokenization and atomic settlement, which it explains as simultaneous exchange of money and assets.