Hong Kong issues whitepaper on ‘architectures and design options’ for retail CBDC

Countries all over the globe are steadily reaching new milestones in development of their own Central Bank Digital Currencies (CBDCs). China was undoubtedly in the lead, with the release of its first e-CNY wallet earlier today. Neighboring Hong Kong also ramped up its efforts, releasing a technical whitepaper exploring the “potential architectures and design options” for a retail CBDC.

Released by the Hong Kong Monetary Authority (HKMA) and titled “e-HKD: A technical perspective,” the paper outlined the agency’s aim to understand the possibilities of the e-HKD from a technical and regulatory policy standpoint.

The ultimate goal would be to create a two-tiered system for its distribution, as the wholesale layer would be designed for a “central bank to issue and redeem CBDC.” The retail layer would be for “commercial banks to distribute and circulate either rCBDC or CBDC-backed e-money.” The paper further elaborated that,

“Only intermediaries (banks and payment service providers) — which are relatively more trustworthy — can participate in the wholesale layer, whereas, the retail layer is an open system accessible to the general public.”

Earlier in June, the HKMA had announced Fintech 2025, a financial technology initiative aimed to modernize Hong Kong’s economy which included offering support to central banks in the adoption of a CBDC. For the most recent development to achieve this end, HKMA Chief executive Eddie Yue said: