Hong Kong Central Bank Releases e-HKD Whitepaper

The Hong Kong Monetary Authority (HKMA) has published a technical Whitepaper Whitepaper A whitepaper is defined as a pitch or persuasive, authoritative, and often in-depth report on a specific topic that presents a problem along with a respective solution. Marketers rely on whitepapers for a variety of reasons, most simply to educate an audience about a particular issue or to promote a particular methodology. In the cryptocurrency world, a whitepaper is a document that should contain all of the information about the technology that was used to build a cryptocurrency network, and ho A whitepaper is defined as a pitch or persuasive, authoritative, and often in-depth report on a specific topic that presents a problem along with a respective solution. Marketers rely on whitepapers for a variety of reasons, most simply to educate an audience about a particular issue or to promote a particular methodology. In the cryptocurrency world, a whitepaper is a document that should contain all of the information about the technology that was used to build a cryptocurrency network, and ho Read this Term on retail central bank digital currency (CBDC) on Monday, thus strengthening its position to launch a digital fiat.

Titled ‘e-HKD: A technical perspective’, the whitepaper explores the idea and feasibility of launching a digital Hong Kong dollar (e-HKD) for its domestic and cross-border markets.

The whitepaper came after the de facto central bank confirmed in mid-2021 that it is planning to study a CBDC for local and retail usage. However, the HKMA was a part of researching wholesale usage of CBDCs with a consortium of other international counterparts since 2017.

“The Whitepaper marks the first step of our technical exploration for the e-HKD,” said Eddie Yue, Chief Executive of the HKMA. “The knowledge gained from this research, together with the experience we acquired from other CBDC projects, would help inform further consideration and deliberation on the technical design of the e-HKD.”

A Collaborative Effort

The monetary regulator is jointly working on the building model of the CBDC with the Hong Kong Centre of the BIS Innovation Hub Hub A hub as its name suggests describes the center of activity or a focal point. In terms of finance, the term hub can refer to Hub and Spoke Trading or a liquidity hub. However, the terms are not interchangeable, but they do overlap. Hub and Spoke trading refer to a network that posts bids and offers for an asset and therefore creates a real market. For example, Hub and Spoke trading allow traders to see the other submissions and offers from other traders on the platform. This is a popular method A hub as its name suggests describes the center of activity or a focal point. In terms of finance, the term hub can refer to Hub and Spoke Trading or a liquidity hub. However, the terms are not interchangeable, but they do overlap. Hub and Spoke trading refer to a network that posts bids and offers for an asset and therefore creates a real market. For example, Hub and Spoke trading allow traders to see the other submissions and offers from other traders on the platform. This is a popular method Read this Term. According to the HKMA, it is one of the first CBDC whitepapers to unveil a technical architecture of a potential digital fiat.

Hong Kong is an autonomous Chinese territory and is following a ‘One Country, Two Systems framework. The central banks of Hong Kong and China earlier initiated talks to test the digital yuan in the autonomous territory, but further developments on that were not revealed.

“The architecture proposed in this whitepaper is most notable for its ability to flexibly and efficiently instantiate different two-tier distribution models of rCBDC while achieving breakthroughs in privacy-preserving transaction traceability and cross-ledger synchronization of decoupled ledgers,” the latest e-HKD whitepaper stated.