Central Banks

Hong Kong releases white paper exploring a retail CBDC

  • The Hong Kong Monetary Authority has published a technical white paper exploring the possible architectures for a CBDC
  • The HKMA believes that a two-layer distribution model divided in retail and who sale is a good concept for a CBDC
  • The HKMA has also been working on a CBDC wholesale research project called LionRock since 2017

The Hong Kong Monetary Authority has published a technical white paper exploring the possible architectures and design options that Hong Kong could adopt for a CBDC if it were to issue one.

The HKMA believes in a  two-layer distribution model

The HKMA has not yet decided whether to issue a retail CBDC but has begun investigating as part of the e-HKD project. The technical white paper is part of that research. The HKMA believes that a two layer distribution model for a retail CBDC is a good concept: wholesale and retail. “Only intermediaries (banks and PSPs [payment service providers]) – which are relatively more trustworthy – can participate in the wholesale layer, whereas the retail layer is an open system accessible to the public,” said the HKMA.

Based on its proposed technical design, the HKMA has identified several areas for further discussion, which it has grouped into seven problem areas. These are ensuring privacy, interoperability, performance and scalability, cybersecurity, compliance, operational robustness and resilience, and technology-enabled functional capabilities. At the moment, it is not certain whether the E-KHD will be created, but the HKMA is seeking feedback and suggestions from the scientific community and industry on the proposed design by 31 December.

A CDBC wholesale project was released earlier

Next to the CBDC e-HKD project, the HKMA has also been working on a CBDC wholesale research project called LionRock since 2017. In 2019,

The HKMA and the Bank of Thailand jointly launched the InthanonLionRock project to explore the potential of CBDC for cross-border payments. The project entered its second phase in 2020 and was renamed Multiple CBDC Bridge (mBridge) in February 2021 when the Central Bank of the United Arab Emirates and the Digital Currency Institute of the People’s Bank of China (PBoC) joined the project.

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