The HKMA conducted a study into a Central Bank Digital Currency (CBDC) in 2017 and recently concluded that the value of CDBC at both retail and wholesale levels in Hong Kong appeared to be limited. However, the Bank of Thailand and the HKMA are working together to develop a cross-border blockchain corridor with initially 10 participating banks for real-time cross-border HKD-THB PvP fund transfers at a wholesale level.
The new blockchain corridor is an interesting experiment which looks to reduce costs and settlement risk of cross-border fund transfers and enhance settlement efficiency and transparency with fewer intermediaries or settlement layers involved in the process.
The HKMA’s Edmond Lau said “Our joint research project with the Bank of Thailand marks an important first step to solve the pain points of low efficiency and high costs in traditional cross-border payments. With the use of blockchain technology, the innovative and unique solution ….. offers good references to the central banking community on the use of Central Bank Digital Currency.”