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The Hong Kong Monetary Authority is asking the public for feedback on the potential issues surrounding the introduction of digital currency for general use at wet markets and other retailers. Photo: Felix Wong

Hong Kong takes another step on e-HKD as HKMA seeks feedback on benefits, pitfalls of digital currency

  • The HKMA first announced a plan to study the potential introduction of a digital form of the Hong Kong dollar in June last year
  • The authority has not yet committed to introducing e-HKD, saying it will keep an open mind on issues raised by the public
Hong Kong is taking another step to establish the merits of a digital currency for public use, as the monetary authority turns to the market for input on the design and policy issues surrounding the so-called e-HKD.
The Hong Kong Monetary Authority (HKMA) is now asking industry leaders and consumers for additional feedback on the potential benefits and pitfalls of creating a digital form of the local dollar, in a follow-up to a technical white paper published in October. The issues include privacy concerns surrounding efforts to ferret out illegal activities.
“The policy and design considerations set out in the paper have reflected [the] latest international developments as well as the unique features of the financial market of Hong Kong,” chief executive Eddie Yue Wai-man said in a statement on Tuesday. “The comments received would help us formulate the strategy for best positioning our financial market” in the area, he added.

The public consultation will end on May 27. The city’s de facto central bank stressed it has not yet made a decision about e-HKD and would remain “open-minded” in considering the issues raised by the public.

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The HKMA has been examining central bank digital currencies since 2017, announcing a project in June last year to explore e-HKD as part of its Fintech 2025 plan. The decision followed similar moves by central bankers to advance their own digital currencies amid growing e-commerce and technological breakthroughs.
The People’s Bank of China (PBOC) has been running pilot programmes for digital yuan or e-CNY for several years in nearly a dozen mainland cities and at several Winter Olympics venues in Beijing in February. The trials are being expanded, the central bank said earlier this month.
According to the PBOC, digital yuan had 261 million users in December, nearly double the users in October.
Eddie Yue Wai-man, the Hong Kong Monetary Authority CEO, at a press conference in September. Photo: Winson Wong
The HKMA in February said it was preparing to roll out a pilot programme for e-CNY in Hong Kong, making it the first location to use the digital currency outside mainland China.

In its latest consultation exercise, the HKMA is asking the public for its input on 12 questions surrounding e-HKD, such as privacy issues and bank funding. It is also seeking views on potential vulnerabilities in the city’s payment system from cyberattacks and power outages if the digital currency is adopted.

“There is a need to ensure that e-HKD upholds user privacy while also ensuring the integrity of the e-HKD system, given that full anonymity, while technically feasible, is not a plausible option due to anti-money laundering and counter-terrorism financing requirements,” HKMA said in the paper.

“To the extent that e-HKD acts as the digital version of Hong Kong dollar cash, its legal mandate and legal tender status would logically be expected to align with that of existing Hong Kong dollar notes and coins,” it added.

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