Hong Kong will start trials of its e-HKD electronic currency in the fourth quarter, following the adoption of e-CNY digital currency across a number of cities in mainland China.
e-HKD is a retail side of Hong Kong’s central bank digital currency (CBDC) that allow the citizens to shop and make money transfer with a mobile wallet app, according to the Hong Kong Monetary Authority (HKMA).
The trial will start with selected banks, payment companies and other technology firms to examine the usage of the digital currency among their staff and a small number of clients, according to Howard Lee, deputy chief executive of the HKMA. E-HKD is just a digital format of the banknotes and coins in circulation.
“The purpose of introducing the e-HKD is to provide more choice for the customer,” Lee said.
Under the proposals, the central bank will issue the digital money, and the banks and other payment companies will distribute the e-HKD to retail customers.
Hang Seng Bank, a subsidiary of HSBC, is among the first batch of banks to test out e-HKD. It was the first foreign lender to launch e-CNY services for corporate customers in mainland China.
The Hong Kong Monetary Authority mentioned the plan for e-HKD via 50-page white paper called “e-HKD: A technical perspective in June. As part of Fintech 2025, Hong Kong will strengthen the implementation and adoption of e-HKD in the next four years.
China became the first major economy to begin exploring its own central bank digital currency (CBDC) in 2014, the country has taken the headline by rolling out trial issuance of a digital yuan in cities since 2019.
The trail for digital yuan has already started in some of the country’s most developed regions including Beijing, Shanghai, Chengdu, Suzhou and Greater Bay Area encompassing Shenzhen, Hong Kong and Macau. Earlier this year, the PBOC and the Hong Kong Monetary Authority began “technical testing” for cross-border use of the digital yuan.
Digital Yuan, also known as e-CNY, is intended to be alternative to the paper currency. Like the paper currency, China’s central bank- People’s Bank of China will govern and control the supply and distribution of digital currency. It will then issue and distribute the digital currency via different commercial banks.
In December 2020, JD.com has partnered with the Digital Currency Research Institute of the People’s Bank of China to test the applications of the Chinese digital currency, making it the first e-commerce platform to accept China’s digital yuan for online shopping.