Did Hong Kong Just Shelf Plans For A Central Bank Digital Currency?

Rumors about the development of a Central Bank cryptocurrency for Hong Kong have been shot down after an official from the  Hong Kong Monetary Authority (HKMA) revealed that there are no plans such plans being made.

The announcement shatters hopes that HKMA, which is considered Hong Kong’s Central Bank, was planning to launch its own cryptocurrency. The idea of Central Bank digital currencies (CBDC) has been tossed around suggesting that it will be the best approach towards embracing newer technologies such as blockchain in the banking sector while maintaining regulation.

Unfortunately, it looks like Hong Kong will not be moving towards that direction any time soon.  This is considering the statement made by Joseph Chan, the current Secretary in charge of the Treasury and Financial Services during a council meeting with Hong Kong Lawmakers.

Chan revealed that HKMA has been conducting research through which it concluded that a CBDC would deliver noteworthy benefits such as efficiency. However, it claims that those benefits would depend on jurisdictional circumstances. In Hong Kong’s case, there is already a highly efficient payment infrastructure in place and thus there is no heavily compelling reason to switch to a CBDC. Chan also pointed out that Hong Kong does not have any plans to launch its own cryptocurrency at this point although it will maintain a close eye on international development.

Despite the lack of more details, Chan’s statement presents itself as an update for the HKMA’s pursuits regarding blockchain technology. The Hong Kong Central Bank revealed in April last year that it had kicked off research concerning CBDCs and that it has also started working ona proof of concept.

Chan released the statement in response to inquiries by a legislator known as Denis Kwok who wanted clarification on whether the government had decided to come up with a CBDC. Lawmakers such as Kwon believe that such a move would help the city to maintain its leadership in highly competitive financial innovation sector.

Hong Kong is considered one of the most cryptocurrency-friendly places alongside Singapore which is why some lawmakers have been pushing for clarity on the matter. A CBDC would allow a central bank to control the circulation of the digital currency in the same manner that they handle the circulation of a fiat currency in an economy. However, a digital currency controlled by the central bank would be regulated to make sure that it does not fall victim to manipulation and illegal activities.