On 18 May 2023, the Hong Kong Monetary Authority (HKMA) announced the commencement of a pilot programme for the trial of its CBDC, the e-HKD. A total of 16 firms, made up of financial institutions and payment facilitators, have been invited to take part in the programme, which will be focused on potential use cases in six categories, including “full-fledged payments, programmable payments, offline payments, tokenised deposits, settlement of Web3 transactions and settlement of tokenised assets.” The HKMA aims to share the key learnings with the public during Hong Kong FinTech Week 2023, which is scheduled to be held from 30 October to 5 November 2023.
The HKMA has acknowledged the obviously complicated technical and regulatory issues involved in the establishment and effective operation of a CBDC, and plans on establishing an expert group to provide insights into areas such as privacy protection, cybersecurity and interoperability. It seems that most members of the expert group will be from academia.
There are currently over one hundred CBDC projects at some stage of exploration or development, around the globe. For example, Mainland China successfully trialled its e-CNY during the Beijing Winter Olympics of 2022, whilst the Reserve Bank of Australia continues to explore a variety of applications for CBDCs, moving closer to digital adoption.
The exploration and roll-out of CBDCs has not been welcomed b y all though - “In February, protestors took to the streets of Amsterdam to march against the European Central Bank’s (ECB) proposal to explore CBDC adoption, citing fears that the government would control the population’s spending habits, given that their transparent nature would enable government entities to monitor purchases made by the public”. And in relation to privacy concerns – in July 2022, Dr Andrea Baronchelli, lead author and Token Economy Theme Lead at The Alan Turing Institute, said: “Central bank digital currencies have the possibility of being more financially inclusive by offering convenience and low transaction costs. However, this comes at the risk of our privacy which we don’t believe should be compromised. We are in a unique position to encourage policymakers to make good design decisions as early as possible – before bad features become entrenched”.