Hong Kong has been in the news lately over its recent change in crypto regulations. While the city seems to be carefully regulating the crypto-verse, it did not shy away from embracing central bank digital currencies [CBDC].
CBDCs emerged as a great interest to many governments across the globe. The potentials of these assets lured many in, however, China’s progress in the same coerced several countries to explore the digital world. As the adoption and dominance of these yet-to-be-released assets were inevitable, every region from around the world began preparing to accommodate CBDCs. Hong Kong seemed to be the latest region to jump onto the CBDC bandwagon. The city’s financial regulator, Hong Kong Monetary Authority [HKMA] portrayed its plunge in digitalization in its recent report titled, “Fintech 2025”.
Hong Kong’s leap towards digitalization
In this report, HKMA pointed out that the city hopes to render the comprehensive adoption of cryptocurrency by 2025. The regulator hopes to achieve this via five major steps. This further required all the banks in the region to embrace financial technology.
With regard to CBDC, the regulators intend to “future-proof” the city for CBDCs. The report revealed that HKMA would bolster its research in the field of CBDC in order to issue the same at wholesale as well as retail levels. The report further read,
“In addition to the continued effort on wholesale CBDCs, the HKMA has been working with the Bank for International Settlements (BIS) Innovation Hub Hong Kong Centre to research retail CBDCs and will begin a study on e-HKD to understand its use cases, benefits, and related risks. The HKMA will also continue to collaborate with the People’s Bank of China in supporting the technical testing of e-CNY in Hong Kong with a view to providing a convenient means of cross-boundary payments for both domestic and mainland residents.”
China’s advancement in the field of CBDC has caused fear among many regions. However, China seemed to be joining forces with Hong Kong with respect to CBDC. The world’s most populous country even took the digital yuan to Hong Kong in order to test it for cross-border payments.
Furthermore, HKMA’s list included the formulation of next-gen data infrastructure, expansion of fintech savvy workforce, and funding and policymaking that nurtures the ecosystem.