Hong Kong is the latest jurisdiction to consider issuing a Central Bank-backed Digital Currency (CBDC), as it launches a study project to explore the possible issuance of the digital form of payment.
The Hong Kong Monetary Authority (HKMA) noted in a report published today by Bloomberg that the study is expected to run for the next 12 months.
According to the report, the study will focus on four key areas, including consumer needs, data privacy, existing anti-money laundering (AML) rules, and other legal and policy considerations.
Commenting on the initiative, the HKMA said:
“This is essentially a research study similar to what is being undertaken by many other jurisdictions.”
Notably, the country’s financial regulators said it would keep an open mind throughout the duration of the program and may disclose any initial thoughts within the period.
Furthermore, the HKMA also revealed that it is working with the Bank of International Settlement (BIS) to study the possible issuance of a retail proof-of-concept CBDC in the country.
The study with BIS will explore the use cases, benefits, and related risks of launching a retail CBDC.
Hong Kong to Revamp Its Financial Space
Hong Kong’s CBDC study program is part of efforts by the HKMA to revamp the country’s financial space and drive more fintech development.
Earlier today, regulators unveiled a new program, dubbed Fintech 2025, to actualize its fintech goal.
The objectives of the Fintech 2025 program include transforming all existing banks into fintech, creating next-generation data infrastructure, increasing its fintech-savvy workforce, nurturing its financial ecosystem with funding and policies, as well as future-proofing a CBDC.
Countries Exploring CBDC
With the rapid decrease in the demand for fiats in recent times, several countries are considering ways to remain relevant in the global financial industry, as they launch CBDC projects.
While most nations are still considering issuing a CBDC, China is at the top of the list, as the country is close to officially unveiling its CBDC.
China, which is ranked as the most populous nation in the world, has conducted several tests for the project across major cities and the world is expecting the country to be the first to make a CBDC available for all citizens.