Hong Kong Official Rules Out Plan for Central Bank Digital Currency

The Hong Kong Monetary Authority (HKMA), the region's de facto central bank, currently has no plan to issue a central bank digital currency (CBDC), a high-level government official said on Wednesday.

During a council meeting with legislators in Hong Kong, Joseph Chan, acting secretary for financial services and the treasury, said the HKMA's research on the topic had led to a belief that a CBDC would be less useful in Hong Kong compared to other jurisdictions.

Chan told the legislators:

"The HKMA has carried out research on CBDC. At the same time, the HKMA notes that the benefits of CBDC and its efficiency gains will depend on the actual circumstances of a jurisdiction. In the context of Hong Kong, the already efficient payment infrastructure and services make CBDC a less attractive proposition. The HKMA has no plan to issue CBDC at this stage but will continue to monitor the international development."

A representative from the HKMA also confirmed the acting secretary's statement, but did not disclose further details on the agency's research on the issue.

Yet Chan's response marks a notable update on the HKMA's explorations of a CBDC prototype as part of its wider effort to gauge the potential of distributed ledger technology.

In April of last year, the HKMA first revealed, in a response to legislators, that the banking authority has started "research and a proof-of-concept work on central bank digital currency."

The HKMA said at the time that the first phase of the study would expect to be done by the end of 2017, based on which the authority would decide on the appropriate action forward.

The latest remarks came as a response to a question raised by legislator Denis Kwok on May 18. According to a document released at the time, Kwok was seeking an answer from the government on whether it will consider issuing a CBDC in a bid to keep the city's competitive edge on financial innovation.

Hong Kong dollar image via Shutterstock