Hong Kong Monetary Authority provides update on retail CBDC that could become DeFi onramp

Monetary Authority Develops Wholesale CBDC Separately and Earlier; it examines potential retail use cases despite the lack of an "imminent role" for the currency.

The Hong Kong Monetary Authority (HKMA) has released an article outlining the status of research on its retail central bank digital currency (rCBDC) proposal and plans for its further development. This is the third article that the HKMA publishes on the e-HKD, as the proposed CBDC is called.

The proposed rCBDC would have a two-tier structure consisting of a wholesale interbank system and a retail user wallet system. A wholesale Hong Kong CBDC has not yet been introduced, but research into it began in 2017, four years before planning for the rCBDC began. The rCBDC would be disintermediated. The paper notes:

“While it appears that e-HKD does not have an imminent role to play in the current retail payment market, we believe that potential use cases for e-HKD may emerge. rapid evolution, even revolution, in the digital economy."

One of the use cases being explored is “using the CBDC as an entry and exit instrument for [decentralized finance, or] DeFi.”

Although no start date is targeted in the newspaper, local press reported that rCBDC testing could begin in the fourth quarter of this year.

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