The Hong Kong Financial Authority (HKMA) is coming into the second section of its e-HKD (e-Hong Kong greenback) pilot program, testing use circumstances for a potential central financial institution digital forex (CBDC).
In a brand new report issued by the HKMA, the central financial institution says the primary section of the hassle had 16 completely different companies exploring a number of areas of CBDC use.
“Part one took deep dives into potential home and retail use circumstances in six classes: full-fledged funds, programmable funds, offline funds, tokenized deposits, settlement of web3 transactions, and settlement of tokenized property. Sixteen companies from monetary, fee and know-how sectors had been chosen to take part.”
One section one participant, funds large Mastercard, explored “wrapping” e-HKD to be used throughout different blockchains by “simulating the acquisition of bodily objects and the contingent trade of NFTs (non-fungible tokens) – every representing a digital certificates of authenticity for the bodily merchandise – on a tokenized asset community.”
The report notes a number of worries associated to CBDCs, together with privateness issues expressed by these surveyed main as much as the section one launch in November 2022.
“Respondents had been typically receptive to an e-HKD, though they highlighted the necessity to research the business viability of use circumstances and different points akin to privateness protections and authorized issues.”
The report additionally flags safety issues concerning programmable retail CBDCs (rCBDCs), which shoppers would use.
Says the report,
“An rCBDC issued as programmable cash could also be extra prone to cybersecurity dangers, as it could current extra mediums for exterior threats to inject malicious code. A fragile stability will subsequently have to be struck between facilitating the trade’s improvement of modern services, and guaranteeing the general security of financial and monetary programs.”
The second section of the pilot will “construct on the success of section one, and take into account exploring new use circumstances for an e-HKD” and “delve deeper into choose pilots from section one.”
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