The Hong Kong Monetary Authority (HKMA) is entering the second phase of its e-HKD (e-Hong Kong dollar) pilot program, testing use cases for a possible central bank digital currency (CBDC). In a new report issued by the HKMA, the central bank says the first phase of the effort had 16 different firms exploring several areas […]
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A Hong Kong regulatory agency is reportedly admitting to pushing global banks operating in its jurisdiction toward accepting crypto exchange platforms as clients. According to a new report by Reuters, The Hong Kong Monetary Authority (HKMA), the body that regulates banks in the region, says that it had asked major financial institutions to “try and […]
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The two central banks are aiming to align their financial service sectors and said both share “many complementary strengths.”
Hong Kong and the United Arab Emirates' (UAE) central banks are looking to collaborate on cryptocurrency regulations and financial technology development.
On May 30, the Hong Kong Monetary Authority (HKMA) said it met with its counterparts at the Central Bank of the United Arab Emirates (CBUAE) with the two agreeing to “strengthen cooperation” on “virtual asset regulations and developments.”
The two central banks also pledged to facilitate discussions on “joint fintech development initiatives and knowledge-sharing efforts” with each region’s respective innovation hubs.
Financial infrastructure and financial market connectivity between the two jurisdictions were also noted as key points discussed.
CBUAE governor H.E. Khaled Mohamed Balama said he anticipates the relationship with the HKMA will be ongoing and long-term.
HKMA chief executive Eddie Yue said the relationship will benefit both jurisdictions economically as they share “many complementary strengths and mutual interests.”
Following the meeting, the two central banks held a seminar for senior executives from banks in Hong Kong and the UAE.
It covered various topics, including how cross-border trade settlement can be improved and exploring how UAE corporations can leverage Hong Kong’s financial infrastructure platforms in order to gain access to Asian and mainland markets.
The collaboration comes as Hong Kong’s Securities and Futures Commission (SFC) is allowing virtual asset service providers (VASPs) to cater to retail investors in Hong Kong starting June 1.
Meanwhile, on May 30 Hong Kong’s treasury chief Christopher Hui told the AFP that the city has allowed retail investors to trade crypto under its new regulatory regime because “virtual assets are going to stay.”
Hui claimed the benefits of utilizing cryptocurrencies outweighed the risks.
Related: Hong Kong to open crypto exchange access for retail users, but there’s a catch
"Despite the potential risks involved, (virtual assets) also carries with it fundamental value," he said, noting the importance of regulation:
"So for these positive elements to be harnessed, these activities have to be allowed in a regulated way."
Several cryptocurrency exchanges have filed applications to have dedicated Hong Kong crypto trading services since the SFC announced the application process, including CoinEx, Huobi and OKX.
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Financial authorities in Hong Kong have unveiled a prototype of the Chinese autonomous territory’s own central bank digital currency called Project Aurum. The two-tier platform features a wholesale interbank and a retail e-wallet system, participants revealed. Hong Kong to Issue Retail Tokens and Stablecoins as Part of Project Aurum A collaboration between the BIS Innovation […]
Following the Bank of England explaining that it would be meddling in U.K. bond markets and the Bank of Japan defending the yen in the foreign exchange market last week, the Hong Kong Monetary Authority (HKMA) revealed it intervened in forex markets on Wednesday. Hong Kong’s central bank detailed that it interfered in forex markets […]
China’s special administrative region of Hong Kong is going to trial а digital version of its dollar as early as this year, in preparation for eventual roll-out. The territory is trying to catch up with those that are already launching central bank digital currencies, including the People’s Republic with its digital yuan project. Trials of […]
Hong Kong’s financial watchdog says it is concerned over the rising popularity of stablecoins, as it invites the public to give their say on the merits and challenges of e-HKD.
The Hong Kong Monetary Authority (HKMA) has warned that stablecoins could undermine the Hong Kong dollar in a just released discussion paper about its retail central bank digital currency, e-HKD.
The HKMA today issued a discussion paper, outlining the policy and design issues involved in the introduction of e-HKD, and encourages the public and industry to participate in the consultation and share their views. Find out more: https://t.co/GndjuZ2Pay pic.twitter.com/hRz2noD0Ps
— HKMA 香港金融管理局 (@hkmagovhk) April 27, 2022
Many in the crypto industry believe that interest in developing central bank-issued digital currencies has been in response to the rise of private-sector stablecoins. This discussion paper appears to confirm that view.
“With continued developments in stablecoins, it cannot be ruled out that a popular stablecoin may eventually emerge,” wrote the HKMA as part of the “e-HKD: A Policy and Design Perspective” discussion paper released on Wednesday.
“In a scenario where the use of these stablecoins becomes widespread… the role of the domestic currency as the single unit of account could be undermined.”
The authority also highlighted risks that such stablecoins could undermine payment integrity due to operational or financial failures, or allow for greater ease of capital flight during a financial crisis period, which would undermine the control of central banks over the local economy.
The HKMA first announced its plans to study a retail-focused central bank issued digital currency in June 2021 as part of its “Fintec 2025” strategy, however, the authority has also been studying to merits of issuing a wholesale CBDC since 2017.
Retail CBDCs are targeted toward the general public and used for everyday transactions. Wholesale CBDCs are issued only to financial institutions and are aimed at making their transactions faster, less expensive, and more secure.
The monetary authority has made no commitment to introducing a digital currency, with the most recent discussion paper merely inviting industry leaders and consumers to provide additional feedback on potential challenges and benefits of the proposed rCBDC.
It also asks for feedback on certain design considerations such as an appropriate rCBDC issuance mechanism, interoperability across large-value and retail payment systems, privacy and data protection, legal considerations, private sector participation, and potential use cases.
Across the border in mainland China, the central bank-issued digital currency continues to pick up steam. Earlier this month, the People’s Bank of China (PBOC) said it will be expanding its digital yuan trial to six more cities, adding to the existing 10 major pilot cities already undergoing trials.
Related: Fitting the bill: US Congress eyes e-cash as an alternative to CBDC
Meanwhile, the Philippines government on Wednesday announced it will be pursuing its own pilot project for a wholesale central bank digital currency, called Project CBDCPh, which it envisions will be used for cross-border payments, equity securities payments, and intraday liquidity facilities (ILF).
The Hong Kong Monetary Authority (HKMA) plans to guide local banks towards full adoption of fintech technologies, a new strategy reveals. The region’s central banking institution also stressed that it’s going to “walk the talk” by digitalizing its own supervision of financial institutions. Hong Kong Central Bank to Support Fintech Development Hong Kong’s monetary policy […]
Financial authorities in Hong Kong have announced a second phase of trials for mainland China’s digital currency. As part of the upcoming tests, the city will link the Chinese digital yuan to its domestic payments system to evaluate the CBDC’s usability in cross-border scenarios. Hong Kong Residents to Load E-CNY Wallets via Mobile Phones China […]