Hong Kong Expands CBDC Pilot Project

The Hong Kong Digital Dollar (e-HKD) pilot project entered a new phase to test cases related to asset tokenization, programmability, and offline payments.

The Hong Kong Monetary Authority (HKMA) announced the launch of Project e-HKD+, a new phase of the central bank digital currency (CBDC) pilot project. One of the key areas of research for the Hong Kong Digital Dollar (e-HKD) will be to explore the commercial value of settling tokenized assets using CBDCs on public blockchains. 

The project will last approximately a year, taking place in a purpose-built sandbox and allowing participants to test solutions in a controlled environment. The e-HKD+ project will focus on three main aspects of CBDCs, including:

• tokenized asset settlement; 
• programmability;
• offline payments. 

The second phase of the Hong Kong Digital Dollar (e-HKD) study will involve 21 financial institutions working on 11 cases:

1. Hang Seng Bank, Aptos Labs, and Boston Consulting Group will test tokenized fund settlement using digital money on public blockchains.
2. HSBC will test the use of CBDCs as a unit of account for tokenized assets on public DLT networks.
3. Standard Chartered, BlackRock, Mastercard, and Liberea will conduct tests to create an efficient and secure environment for tokenized fund transactions.
4. Visa, ANZ, Fidelity, and ChinaAMC will explore programmable tokenized deposit settlement for cross-border payments and interbank transfers.
5. Bank of China Hong Kong Branch will build an e-HKD infrastructure based on its own blockchain and work with Sanfield (management) Limited to develop smart contracts for trust fund applications.
6. China Construction Bank (Asia) will test programmable prepayment for merchants and evaluate different blockchain infrastructure designs for possible e-HKD implementation.
7. DBS Bank will develop a rewards platform linked to environmental, social, and governance (ESG) initiatives.
8. Hang Seng Bank will test how CBDCs can support the creation of an open, efficient, and scalable next gen digital rewards platform.
9. Mastercard, Kasikornbank (KBank), and Airstar Bank will explore the use of CBDCs to facilitate domestic and international commerce.
10.  ICBC (Asia) will explore the creation of an anonymous CBDC wallet and test dual offline payments using e-HKD.
11. Bank of Communications (Hong Kong) and China Mobile will work to implement an offline payment system using e-HKD via SIM cards.

The HKMA will also continue to develop the legal framework and tech infrastructure for the eventual e-HKD issuance. In addition, the regulator issued a call for applications for a new project in which the HKMA, together with Cyberport, will explore AI apps to manage risk, combat fraud, and improve customer experience in the financial industry.

The HKMA is actively working on the development of e-HKD since 2021. In 2023, a retail CBDC pilot program was launched, which lasted for five months, and its wholesale version was launched. In 2024, the HKMA team actively explored tokenization and cross-border payments in CBDCs in collaboration with Banque de France , Standard Chartered , SWIFT , BIS , and Visa .