Hong Kong will explore digital currency, monetary authority says as it launches fintech plan
- Time is right for HKMA to explore e-Hong Kong dollar, CEO Eddie Yue says
- Authority to oversee banks’ fintech plans, set up data sharing to help SMEs get bank loans and provide training and support for projects under new fintech plan
The HKMA, the city’s de facto central bank, will include users’ privacy, security and anti-money-laundering concerns in the study, Eddie Yue Wai-man, the authority’s chief executive (CEO), said on Tuesday. The announcement came during the launch of Fintech 2025, the HKMA’s fintech plan for the next four years.
“Hong Kong people, nowadays, are more willing to use digital banking services. In addition, many overseas central banks have studied digital currencies. It is the right time for the HKMA to explore if we should have an e-Hong Kong dollar,” Yue said. “The HKMA has set up a working group to study the technology and regulatory issues related to an e-Hong Kong dollar. We will have a conclusion in about 12 months.”
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What is the Hong Kong Dollar Peg?
The digital currency, if launched, will not have any implications on the Hong Kong currency’s US dollar peg, said Howard Lee, the HKMA’s deputy CEO. “The e-Hong Kong dollar will just be an electronic version of a physical banknote. As such, the mechanism of the issuance of e-Hong Kong dollars will be the same as the issuance of physical banknotes under the peg,” he said.
The HKMA might keep the current system, where three banks – HSBC, Standard Chartered and Bank of China (Hong Kong) – are allowed to issue banknotes, when it comes to issuing the digital currency, or it might issue e-Hong Kong dollars itself.
Lee said the digital currency was not related to the cross-border blockchain payments platform the HKMA has been working on with the central banks of China and Thailand since 2019. The e-Hong Kong dollar would be for use by Hongkongers in the domestic market.
Industry body Hong Kong Association of Banks said it welcomed Fintech 2025. The association “has made deliberate efforts to promote the application of fintech, and collaborated with member banks to facilitate the adoption of artificial intelligence and data analytics in banking operations, the use of regulatory technology in compliance, and the enhancement of cybersecurity”, it said on Tuesday.
“Thanks to the sustained investments in technology, banks in Hong Kong have been able to operate and provide banking services as usual during the Covid-19 pandemic,” the association said, adding that it looked forward to working with different stakeholders and supporting fintech development in Hong Kong.
