Hong Kong Advances Digital Money Strategy as HKMA’s e-HKD Pilot Programme Enters Phase Two

The Hong Kong Monetary Authority (HKMA) , with analytical support from Deloitte, has released its e-HKD Pilot Programme Phase 2 Report, offering a look into how central bank digital currencies (CBDCs) and other digital money forms could reshape the city’s financial ￰0￱ report shows a pivotal transition — from physical cash to digital money powered by distributed ledger technology (DLT) — and outlines how Hong Kong is positioning itself as a global leader in digital finance, tokenisation, and next-generation payments ￰1￱ the Digital Money Landscape According to the HKMA report, the digital money landscape is evolving into two main categories: public money and private ￰2￱ money includes central bank digital currencies like the e-HKD, while private money encompasses tokenised deposits and regulated ￰3￱ innovations are building the foundation for tokenisation in Hong Kong, enabling faster, more transparent, and programmable transactions that connect traditional finance with the emerging Web3 ￰4￱ HKMA has been researching the e-HKD since 2017, conducting pilot studies and technical experiments to explore its potential in both wholesale and retail ￰5￱ Phase 2, the focus broadened to include comparisons between the e-HKD and private forms of digital money, evaluating their usability, scalability, and commercial ￰6￱ Themes and Findings The Phase 2 pilots, conducted with 11 industry partners across the banking, payments, and technology sectors, explored three central themes: Settlement of Tokenised Assets: Pilots tested the use of a hypothetical e-HKD for atomic settlement of tokenised assets such as money market funds and ￰7￱ showed that DLT-based settlement could shorten cycles from T+2 to T+0, improving liquidity and reducing counterparty risk.

However, banks indicated that tokenised deposits might offer similar efficiency with fewer infrastructure changes. Programmability: The report examined the potential of programmable payments using smart contracts and purpose-bound money (PBM). Pilot use cases included green reward vouchers, escrow-based prepayments, and supply chain ￰8￱ programmability enhances automation and transparency, the HKMA found that commercial adoption models remain limited, with no clear business case for large-scale ￰9￱ Payments; Offline e-HKD pilots explored Super SIM and NFC-based payments that operate without internet ￰10￱ Hong Kong’s robust digital infrastructure and existing offline payment systems, the HKMA concluded that an offline e-HKD would likely add limited incremental benefit at ￰11￱ Road Ahead The HKMA, supported by Deloitte’s analysis, will prioritise wholesale use cases for the e-HKD, particularly in the settlement of tokenised assets and interbank ￰12￱ central bank will continue to assess retail applications while laying the policy, legal, and technical groundwork to ensure readiness by ￰13￱ the global race toward digital money intensifies, Hong Kong’s collaborative approach — combining public oversight with private innovation — positions it at the forefront of financial ￰14￱ e-HKD initiative reflects not just the city’s commitment to technological advancement, but also its strategic role in shaping the next era of money — connected, efficient, and inclusive.