Research into central bank digital currencies (CBDCs) will play a key role in Hong Kong’s fintech development efforts.
The Hong Kong Monetary Authority (HKMA) has announced the “Fintech 2025” strategy with central bank digital currencies (CBDCs), both retail and wholesale, included in the financial innovation package. digital.
Revealing the fintech strategy through a release on Tuesday, the CBDC is said to play a part in the city government’s goal of driving inclusive digital finance adoption by 2025.
Regarding the central bank’s digital currency plans, the HKMA revealed that it will ramp up research efforts to ensure Hong Kong is ready to float both retail and wholesale CBDCs.
According to the announcement, the HKMA is working with the Bank for International Settlements to research a retail Hong Kong dollar digital currency. This research is said to be looking at the risks, benefits, and potential use cases of an HKD cryptocurrency.
The HKMA also announced that it will continue to work with China’s central bank on the cross-border use of the latter’s digital currency electronic payment (DCEP) project. Indeed, Hong Kong is looking to expand experimental studies on the PBoC’s digital yuan.
Meanwhile, HKMA is also part of a consortium of Asian central banks that are working on a digital currency bridge of multiple central banks. The project builds on a similar partnership between Hong Kong and Thailand to create cross-border CBDCs based on decentralized ledger technology.
The expanded CBDC research plan is one of the five key focuses of Hong Kong’s fintech strategy. Other areas include ensuring the city’s banks embrace digital financial technology while creating a robust data infrastructure to support the planned fintech expansion.
Hong Kong also wants to support its comprehensive fintech overhaul with government-led policies, while laying the groundwork to develop a skilled workforce for the new digital finance paradigm.
Amid an expanding fintech focus, Hong Kong is also moving to restrict access to cryptocurrencies. The city’s Treasury and Financial Services Department released a policy proposal in May calling on the government to restrict cryptocurrency trading to qualified investors with portfolios worth of at least $1 million.
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