The Hong Kong Monetary Authority (HKMA) deputy chief Howard Lee disclosed that Hong Kong is set to explore a general purpose central bank digital currency (CBDC) in an upcoming project tagged Project Aurum. Lee said that CBDCs have been high on the Central bank’s agenda and believes CBDCs would potentially foster competition and innovation in the payment sector.
“The subject of CBDC has been high on the agenda.”
“The subject of CBDCs, be it wholesale or general-purpose, has been high on the agenda of the central banking community. Apart from being a new and trusted digital means of payment, CBDCs could potentially also foster competition and innovation in the payment sector.” said the deputy chief. The general purpose CBDC, according to him, would be distributed through commercial banks and payment service providers. This would allow the central bank to study the benefits and challenges of different distribution architectures. Central banks across countries are actively exploring CBDCs.
Aurum project includes the hybrid CBDC and private CBDC-backed stablecoin models.
Project Aurum would explore the benefits and challenges of different architectures for the distribution of a general-purpose CBDC. The two architectural models under the project include the hybrid CBDC and private CBDC-backed stablecoin models. A hybrid CBDC would allow intermediaries such as banks to handle payments while providing direct claims on the central bank. A CBDC-backed stablecoin, on the other hand, would minimize price volatility by pegging to a more stable asset such as fiat currency. Hong Kong and Thailand had initially started research into cross-border CBDC payments last year. The project revolved around the two countries first, before other apex banks like China and the United Arab Emirates were brought onboard.