The Hong Kong Monetary Authority (HKMA) has released a research paper outlining the state of research on its proposed Retail Central Bank Digital Currency (rCBDC) and plans for its further development. This is the third paper the HKMA has published on e-HKD, as the proposed CBDC is called.
The proposed RCBDC will there is A two-tier structure consisting of wholesale interbank system and retail user wallet system. No wholesale Hong Kong CBDC has yet been launched, but research began in 2017, four years before the rCBDC plan was launched. RCBDC will be disbanded. Paper notes:
“While it appears that e-HKD may not have an imminent role in the current retail payment market, we believe e-HKD’s potential use cases could emerge quickly from the rapid evolution, even revolution, in the digital economy. ”
One of the use cases under consideration is the use of CBDC as an on- and off-ramp instrument for [decentralized finance, or] Defy.”
Although the paper did not target a start date, local media Report RCBDC testing may start in the fourth quarter of this year.
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Much of the paper was devoted to responses to previous papers, one of which was a request for comments on the technical aspects of rCBDC, the other dealing with policy and design. Among them, the papers received 75 responses from stakeholders.
Most commentators on the technical side prefer that privacy and cyber security take precedence over efficiency. There was a wide range of opinions about performance and scalability.
Offline and cross-border payments and interoperability with existing payment systems were the main concerns expressed about the design. Interoperability with mainland China’s e-CNY CBDC, now in pilot stage, was particularly noted.