After India and China, Now Hong Kong Accelerates CBDC Work With a Special Twist: Here’s What We Know

While India and China have decided their CBDCs to be regulated by the central banks, Hong Kong has left that decision to be finalised for a later time.

Written by Radhika Parashar, Edited by Manas Mitul | Updated: 18 April 2023 18:31 IST

After India and China, Now Hong Kong Accelerates CBDC Work With a Special Twist: Here’s What We Know

Photo Credit: Reuters

A CBDC is a virtual representation of a country’s fiat currency

Highlights

India and China are in advanced phases of their CBDCs
Hong Kong and Japan are accelerating their respective CBDC efforts
Hong Kong has been deemed the most crypto-ready country in the world

After India and China, that have led the CBDC revolution in Asia, Hong Kong is accelerating its efforts to introduce a national digital currency in their existing financial system. The administration of Hong Kong is currently working on the roadmap to introduce the e-HKD CBDC to its estimated population of over 7.5 million in the coming months. While India and China have decided their CBDCs to be regulated by the central banks, Hong Kong has left that decision to be finalised for a later time.

In a new twist, Hong Kong has left it to the banks to discuss and decide if they wish to keep the e-HKD CBDC either centralised — under their control, or decentralised — where the CBDC would be distributed away from a central, authoritative location in small fractions.

“They (the banks) are allowed to go and review and research and then propose back,” a CoinDesk report quoted a source familiar with the situation as saying.

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Unlike the UK and the US, that have taken a rather democratic approach and invited suggestions on CBDCs from their nationals, Hong Kong wishes to keep the process more in the hands of the authorities.

Regular citizens of Hong Kong are not likely to be part of any CBDC-related decision making. While India did hold several rounds of discussions with finance ministry officials and blockchain industry insiders, China is not known to have taken a similar approach.

The overall approach to Web3 in Hong Kong has been very progressive. The nationals there are welcoming Web3 technologies like cryptocurrencies, NFTs, and the metaverse with an experimentative approach.

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Forex, in its latest ‘Worldwide Crypto Readiness Report' suggested that Hong Kong is the most crypto-ready country in the world. In the index, Hong Kong bagged 8.6 out of 10 in-terms of being lucrative for the crypto sector.

Given the grown interest in crypto among its citizens, the country has also amended its Anti-Money Laundering (AML) and Counter-Terrorist Financing (Amendment) Bill 2022, to now include crypto transactions as well.

Introducing a CBDC in its financial system is a decision that Hong Kong has started acting upon after due consideration.

Built on blockchain networks, a CBDC, or a Central Bank Digital Currency, is a virtual representation of a country's fiat currency. Replacing physical notes with CBDCs not only reduces the cost of managing them, but also adds a layer of unchangeable permanency in maintaining financial records.

This is the reason why several nations around the world including Japan, Australia, and Dubai among others, are working around creating their native CBDCs.

Apple is opening its first stores in India, one in Mumbai and the other in Delhi. What does this mean for Apple customers in India? We discuss this and more on Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.

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Further reading: Cryptocurrency, CBDC, e HKD, Hong Kong

Radhika Parashar

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Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More