Hong Kong Monetary Authority Chief Executive Eddie Yue Wai-man (center, front row) stands with representatives from 16 financial, payment and technology companies in the kickstart ceremony of e-HKD Pilot Program in Thursday (OSWALD CHAN / CHINA DAILY)

The Hong Kong Monetary Authority launched the e-HKD (electronic Hong Kong dollar) Pilot Program — even though the HKMA has not yet decided whether and when to introduce e-HKD in the city.

The HKMA selected 16 firms from the financial, payment and technology sectors to participate in the first round of the program for this year. The first round involves 14 pilot projects covering six categories of potential e-HKD use cases, including full-fledged payments, programmable payments, offline payments, tokenized deposits, settlement of Web3 transactions, and tokenized-asset settlements.

The selected participants can use HKMA’s e-HKD “sandbox” to examine implementation and design issues relating to e-HKD and gain actual experience

The selected participants can use HKMA’s e-HKD “sandbox” to examine implementation and design issues relating to e-HKD and gain actual experience. The HKMA will closely engage with the selected firms to conduct pilot programs and monitor progress in the next few months.

“This implementation will entail far-reaching implications of a range of issues like legal, regulatory policy, financial stability, privacy, or even interaction with existing payment methods, where we need to think about interoperability,” HKMA Chief Executive Eddie Yue Wai-man said in the launch ceremony on Thursday.

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“We believe that e-HKD has got the potential to make payments faster and more efficient while supporting the digital economy,” Yue said. However, he added, “the HKMA is not yet at a point where a firm decision can be made to introduce e-HKD”.

Representatives from the 16 financial, payment and technology companies were invited to introduce their proposed use cases of e-HKD in the ceremony.

“The project goes well beyond just technology. It will take our collective wisdom and effort to create innovative-use cases so that if e-HKD is implemented in Hong Kong, we hope to see widespread adoption so as to achieve the network effects that are required of any successful retail payment initiatives,” Yue said.

The HKMA chief added that the key learnings of the 14 pilot projects of e-HKD will be shared at the upcoming Hong Kong FinTech Week 2023.

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HKMA will also establish the CBDC Expert Group to invite leading academics from local universities to contribute insights on policy and technical issues surrounding central bank digital currencies, such as privacy protection, cybersecurity and interoperability.

HKMA announced in June 2021 it would study the prospect of issuing e-HKD in Hong Kong as part of the “Fintech 2025” strategy. After two rounds of public consultation, HKMA released the position paper in September 2022, stating that the issue of e-HKD implementation will be based on three stages.