Hong Kong regulator initiates tokenisation pilot program

Project e-HKD brings together 21 financial institutions to explore 11 use cases across three key areas: settlement of tokenised assets, programmability, and offline payments. This initiative represents a significant step in understanding how digital currencies can transform financial transactions and improve accessibility.

To support collaboration and knowledge-sharing, the HKMA plans to establish the e-HKD Industry Forum, providing a platform for institutions to address shared challenges. Additionally, industry-led working groups will be formed to deliver specific recommendations on various topics, ensuring that diverse perspectives shape the development of the digital currency.

The pilot program includes innovative use cases such as settling tokenised funds with digital money, involving partnerships between institutions like Hang Seng Bank, Aptos Lab, and Boston Consulting Group. Another project focuses on real-time settlement for interbank transfers and cross-border payments, a collaboration involving Visa, ANZ, Fidelity, and ChinaAMC. These initiatives highlight the potential for digital currencies to streamline complex financial processes and enhance efficiency.

Phase Two of the project is set to span approximately one year. During this time, participants will continue refining use cases and testing the integration of digital money into different financial scenarios. This phase will play a crucial role in identifying practical applications for e-HKD and determining how it can deliver value to both institutions and the public.

In parallel with Project e-HKD, the HKMA has launched its Gen AI sandbox initiative. This platform allows authorised institutions to test AI-driven prototypes in a secure environment. With access to Cyberport's infrastructure and guidance from the regulator, institutions can experiment with artificial intelligence to enhance their services and develop innovative solutions tailored to the evolving needs of the financial industry.

Both initiatives underscore a commitment to fostering innovation within the financial sector. By exploring the potential of digital currencies and AI, the HKMA is paving the way for a more efficient, accessible, and technologically advanced financial ecosystem. These projects aim to address current challenges while creating opportunities for growth and transformation in the digital age.