As a leading advocate and strong supporter of Central Bank Digital Currency (‘CBDC’) development in Hong Kong, Hang Seng Bank (‘Hang Seng’) has been actively exploring potential applications of e-HKD. In response to the e-HKD pilot programme announced by the Hong Kong Monetary Authority (‘HKMA’), Hang Seng proposed three use cases – one of them in collaboration with other financial institutions. All three proposals have been selected by the HKMA, making Hang Seng the only bank to have three use cases under the programme.
The Bank’s use cases, which will undergo real-life simulation for two scenarios, include the issuance of programmable tokens and the development of an e-HKD wallet to provide fast, seamless and customised programmable payment experiences for merchants and government or public organisations. For example, merchants that operate rewards programmes will be able to distribute vouchers to customers for specific purposes and collect payments through the e-wallet. Government or public organisations will be able to distribute subsidy payments for specific consumption uses, including those with an expiry date, to citizens to reduce administration and transaction costs.
Hang Seng Bank will also collaborate with HSBC and Visa to explore the feasibility of tokenised deposits and digital settlement in different scenarios, with an objective of increasing enterprise capital management efficiency and reducing related costs.
Diana Cesar, Executive Director and Chief Executive at Hang Seng Bank, said: “We are delighted that our three use cases have been selected for the HKMA's e-HKD Pilot Programme. We have already made significant progress and plan to undertake two real-life simulations in the third quarter this year. Hang Seng is committed to supporting the HKMA to shape the development of e-HKD and explore the opportunities as well as benefits it can generate.”
Hang Seng’s efforts to help support the development of CBDC include both local and cross- boundary applications. The Bank was one of the first four banks to participate in the technical testing of using the Faster Payment System to top up e-CNY wallets to improve the efficiency of cross-boundary payments. As a further indication of its strong capabilities, the Bank also received the ‘Best Use Case Award’ from the HKMA in the ‘Global Fast Track 2022 – CBDC Track Pitching Competition’ last year.
Re-disseminated by The Asian Banker