Hong Kong Has No Plan for Central Bank Digital Currency

CBDC is less attractive for the advanced economy of Hong Kong, according to a Monetary Authority official.

by Marin Marinov
31 May • 3 min
In News

Hong Kong, one of the leading global financial hubs, has no plan for issuing central bank digital currency (CBDC), Joseph Chan, a high-ranking official at the Hong Kong Monetary Authority (HKMA), said on Wednesday.

HKMA, which serves as a central bank for the special autonomous region of Hong Kong, made a research about the potential impact of CBDC and found that central bank digital currency is less attractive for the advanced economy of the megalopolis, Joseph Chan explained while answering questions in the city legislative council.

“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,” Joseph Chan, who serves as Acting Secretary for Financial Services and the Treasury Bureau noted.

“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,” Chan added.

 

Hong Kong and crypto activity

Chan was answering a question by Hon Dennis Kwok, a lawmaker from the opposition Civic Party, which wants more autonomy for Hong Kong. Kwok wanted to know how China’s central bank (PBoC) indications for possible developing of CBDC impacted the Hong Kong government, which has a full financial autonomy from Beijing.

“Whether the [Hong Kong] authorities have taken measures to ride on the opportunities arising from PBoC's issuance of a statutory digital currency to develop Hong Kong into an offshore or international trading hub for the digital currencies concerned; if so, of the details; if not, the reasons for that,” Hon Dennis Kwok asked.

However, Joseph Chan did not directly answer these questions.

In January, Fan Yifei, PBoC’s vice governor, outlined the Beijing strategy towards CBDC, giving a sign for possible central bank digital currency.

“A CBDC will also help curb the public's demand for private cryptocurrencies, which will strengthen the role of our sovereign currency,” Yifei wrote in an op-ed article for a local newspaper.

China has strengthened its influence on Hong Kong’s government in recent years, leading to political protests and turmoil. The autonomous region did not follow China after Beijing decision for banning cryptocurrency trading in 2017. Some of the leading virtual coin trading platforms are headquartered in Hong Kong, including BTCC.

Hong Kong is third in the 2018 Global Financial Centres Index because of its more liberal economic policy than China. Beijing is ranked 11th.