What HKMA’s second experiment with retail e-HKD means for Hong Kong residents

E-HKD will promote financial innovation as the city moves closer to finding more uses for the digital coin before its potential public roll-out, experts say

With the digital coin, Hong Kong residents could potentially borrow from more than one lender at preferential rates and enjoy faster approval and disbursement

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Hong Kong is set to expand its experiment on digital currency for retail uses in the coming weeks. Photo: HKGCC

Published: 6:00am, 27 May 2024Updated: 9:47am, 27 May 2024

The Hong Kong Monetary Authority (HKMA) is pushing ahead with the next phase of its experiment with retail e-HKD, or central bank digital currency (CBDC), after gaining insight into its potential uses during a six-month pilot programme that concluded in October last year.

The HKMA has said the next round of the trial with selected participants will delve deeper into the technology, business model and legislation surrounding e-HKD transactions.

One of the potential uses could be for pricing and disbursing mortgages, with consumers and banks benefiting equally from the digital currency’s adoption.

Traditionally, consumers turn to banks to help fund home purchases, at interest rates based on the amount and length of borrowing. But with the e-HKD, Hong Kong residents could potentially borrow from more than one lender at preferential rates and enjoy faster approval and disbursement.

Loan applications and approvals for home mortgages could get faster with e-HKD, experts say. Photo: Reuters

Boston Consulting Group (BCG), HKT Payment and ZA Bank devised this use case in the inaugural e-HKD pilot programme. Borrowers could obtain secured lending for smaller amounts by tokenising or fractionalising a property right.

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