It’s also a different usage case compared with the digital currency under development by China’s central bank, which is focused on replacing coins and banknotes in circulation to support retail transactions, said the HKMA’s senior executive director Edmond Lau. Project LionRock is focused on streamlining cross-border transfer and payment between banks and companies, Lau said.

“The prospect of issuing a central bank digital currency for retail purpose in Hong Kong is limited, as we have so many retail payment services (ranging from) credit card, debit card, and (others),” Lau said during a panel discussion at the Hong Kong fintech Week last month.

Using blockchain, the HKMA’s cross-border payment platform under the “depositary receipt corridor network” enables companies in both Hong Kong and Thailand to settle wholesale payment with each other directly, as the blockchain technology overcomes the shortcomings with the existing correspondent banking model, which involves multiple numbers of intermediaries that often results in payment delays.

Currently, the HKMA is also working with HSBC and ZhongAn Technologies International, which holds a virtual bank licence through its subsidiary and is the Hong Kong unit of mainland online-only insurtech player ZhongAn Online P&C Insurance, on the digital currency project.

Bank of Thailand has also been researching on its own central bank digital currency under its “Project Inthanon”, which also involves banks such as HSBC, Standard Chartered, and half a dozen Thai banks including Kasikorn Bank and Krungthai Bank.

Currently, Hong Kong interbank clearing, which is the interbank clearing and settlement joint venture owned by the HKMA and the Hong Kong Association of Banks, offers PvP on Thai baht but is limited only to US dollar exchange. Payment Vs payment is a foreign exchange settlement mechanism that ensures a transfer of one currency occurs only if a transfer of the other currency also takes place, which will be final and irrevocable.