Hong Kong launches new round of e-HKD pilot to study CBDC programmability, tokenization

Hong Kong launched today the second phase of its e-HKD pilot to study the programmability, tokenization and atomic settlement associated with the central bank digital currency (CBDC) in trial, as the region continues to explore the possibility of wider CBDC adoption.

The Hong Kong Monetary Authority, the de facto central bank, said in a statement that it plans to explore new use cases and delve into “select pilots” from the first phase — which concluded in October 2023.

The HKMA noted that the first phase of the e-HKD pilot had studied domestic retail use cases for programmable payments, settlement of tokenized assets and offline payments.

On the wholesale CBDC front, the HKMA said that the enhanced e-HKD sandbox will also be supported by Project Ensemble, a new wCBDC project it launched earlier this month. The pilot plans to “accelerate the prototyping, development and testing of use cases by pilot participants, as well as facilitate the study of interoperability and interbank settlement between e-HKD and other forms of tokenized money,” the HKMA added.

The second phase of the e-HKD pilot is expected to last until mid-2025, according to the HKMA’s pilot page. The government is accepting applications from organizations interested in participating in the second-phase pilot until May 17.

Many major financial institutions and payment firms — including Alipay, Bank of China, HSBC, Hang Seng Bank, China Construction Bank, Industrial and Commercial Bank of China, Mastercard, Visa, Boston Consulting Group and ZA Bank — participated in the first phase of the e-HKD pilot.

The HKMA started to research CBDCs in 2017 and began placing greater emphasis on studying a potential e-HKD in 2021 at both wholesale and retail levels, according to its website.