Hong Kong: Central Bank Digital Currency ‘not Clearly Superior to’ Existing Infrastructure

Hong Kong will not currently issue a central bank digital currency (CBDC), citing the existence of already efficient payment infrastructure, according to a government press release published yesterday, May 30.

Joseph Chan, the Acting Secretary for Financial Services and the Treasury in the Legislative Council, said in response to questions about both the People’s Bank of China (PBoC) and the Hong Kong Monetary Authority (HKMA) issuing digital currencies that although the HKMA is monitoring cryptocurrency development globally, they have “no plan to issue CBDC at this stage.”

According to Chan, the Committee on Payments and Market Infrastructures (CPMI) — made up of members from the PBoC and the HKMA — and the Markets Committee (MC) of the Bank for International Settlements have been collaborating on a study of the effect of CBDC. Their recently issued CBDC report finds that “currently proposed implementations of CBDC for wholesale payments look broadly similar to, and not clearly superior to, existing infrastructures”:

“CBDC that could be made widely available to the general public and serve as an alternative safe, robust and convenient payment instrument raises important questions and challenges that would need to be addressed.”

The report also notes that any benefits of CBDC may be curtailed by the existence of efficient private retail payment products, making CBDC “a subject which requires further study and more proof-of-concept work to ascertain its feasibility for payment applications.”

Chan concludes that the government will also monitor international development of Initial Coin Offerings (ICOs) and cryptocurrencies, in order to “protect the interest of the investing public” in Hong Kong.

At the beginning of May, the Hong Kong Financial Services and Treasury (FSTB) released their own report that found that cryptocurrency use did not have any visible impact in money laundering and terrorism financing.