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Hong Kong Launches Second Phase of e-HKD Pilot to Explore Tokenization and Offline Payments

SUMMARY

The Hong Kong Monetary Authority is launching a sandbox to explore tokenized asset settlement, programmability, and offline payments.
Participants include major institutions like Bank of China, HSBC, Hang Seng Bank, Aptos Lab, Visa, and Mastercard.

Hong Kong has launched the second phase of its central bank digital currency (CBDC) pilot to evaluate the commercial practicality of e-HKD, presently called “Project e-HKD+.” The Hong Kong Monetary Authority (HKMA), which serves as the region’s central bank, reported that this phase would include testing different use cases, including settlement of tokenized resources, programmability, and offline payments. This activity incorporates the cooperation of 11 companies from differing sectors to investigate innovative solutions for e-HKD and tokenized deposits.

To encourage these experiments, the HKMA will actualize a dedicated e-HKD sandbox where participants can create and test models. Hang Seng Bank, Aptos Lab, and Boston Consulting Group are among the firms chosen, with their focus on determining the commercial potential of settling tokenized funds utilizing digital cash on public blockchains. Other noteworthy members include Bank of China, HSBC, ICBC, Standard Chartered Bank, DBS, BlackRock, Mastercard, and China Mobile, signaling the solid interest over different businesses in Hong Kong’s CBDC project.

In addition, global financial mammoths like Visa, ANZ, Fidelity, and ChinaAMC will investigate the settlement of interbank transfers and cross-border payments through e-HKD. The aim is to disentangle and encourage Australia-based corporate investors’ purchases of tokenized fund units offered by resource management firms in Hong Kong, broadening the potential use cases for CBDCs in international finance.

The HKMA anticipates to release the discoveries from this second phase by the end of 2025. This takes after the first phase of the pilot, which examined domestic retail use cases for programmable payments, settlement of tokenized resources, and offline payments, laying the foundation for further development.

Eddie Yue, the chief executive of the HKMA, highlighted the importance of this venture in a statement, emphasizing that the e-HKD Pilot Program offers valuable knowledge into how advanced currencies can give special benefits to the general public. The HKMA remains committed to a use-case-driven approach to continue its investigation of digital cash and its broader potential.

The HKMA started researching CBDCs in 2017, continuously expanding its focus on the improvement of e-HKD in 2021, both at the wholesale and retail levels. This second phase demonstrates Hong Kong’s relentless commitment to leading advancement in the digital currency space, making it a key player in the global development of CBDCs.