Cryptocurrency

Hong Kong is adding the central bank’s digital currency to its fintech strategy

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The Hong Kong Monetary Authority (HKMA) has published its “Fintech 2025” strategy with central bank digital currencies (CBDC) for both retail and wholesale, which are included in the digital finance innovation package.

With the unveiling of fintech strategy in a press release released Tuesday, CBDCs will reportedly play a role in the city government’s goal of promoting a full adoption of digital finance by 2025.

Regarding its central bank digital currency plans, HKMA announced that it will step up its research efforts to ensure Hong Kong’s readiness to bring both retail and wholesale CBDCs to market.

According to the announcement, HKMA is working with the Bank for International Settlements to research a Hong Kong dollar digital currency for retail use. This study reportedly examines the risks, benefits, and potential use cases of an e-HKD currency.

The HKMA also stated that it will continue to work with the Central Bank of China on the cross-border use of its Digital Currency for Electronic Payments (DCEP) project. In fact, as early as May, Cointelegraph reported that Hong Kong is looking to expand pilot studies for the PBoC’s digital yuan.

The HKMA is now also part of a consortium of Asian central banks that are working on a digital currency bridge for several central banks. The project builds on a similar collaboration between Hong Kong and Thailand to create cross-border CBDCs based on decentralized ledger technology.

The expanded CBDC research plan is one of five focal points of Hong Kong’s fintech strategy. Other areas include ensuring that the city’s banks are leveraging digital financial technology while creating a robust data infrastructure to support the planned fintech expansion.

Hong Kong also wants to support its major overhaul of fintech companies with government-led policies while laying the groundwork for developing a skilled workforce for the new digital finance paradigm.

In light of its expanded fintech focus, Hong Kong is also trying to restrict access to cryptocurrencies. The city’s Financial Services and Treasury Bureau published a proposed policy back in May calling on the government to restrict crypto trading to qualified investors with portfolios worth at least $ 1 million.

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Melinda Martin