It has been a while since a country’s central bank was looking to issue a nationwide digital currency. Hong Kong is the latest country to do so, as the Monetary Authority is looking to create a central bank digital currency. Interestingly enough, the HKMA is teaming up with none other than the R3 consortium to explore the options on the table.
R3 Is Still Alive and Kicking
It has to be said, 2016 was not the best year for the R3 consortium by any means. After their Corda project was unveiled, the team ultimately admitted they are not even using blockchain technology or a distributed ledger. This news was quite troublesome, as validated most people’s thoughts of how the group was not working on what they made people think. However, the consortium never said they would use blockchain tech in the first place.
Lo and behold, the R3 consortium is ready to make more headlines, but rather in a positive manner this year. Thanks to a new partnership with Hong Kong-based banks and the local Monetary Authority, things are starting to look very promising for R3 The goal of this partnership is to create a national digital currency for Hong Kong, which sounds rather interesting.
The current plan is to collaborate with three note-issuing banks and the Hong Kong Interbank Clearing Limited. All of these financial institutions provide critical services to the Hong Kong ecosystem, that much is certain. Working on a national digital currency for such a small country may seem like an odd decision, yet it holds a lot of merit in the long run.
This particular digital currency will be used to facilitate inter-bank payments and inter-corporate transactions in the wholesale market. Moreover, it will also play a role in how debt securities are settled. This does not necessarily mean the currency will be issued to consumers, though, as it is seemingly more of a project that may compete with the likes of Ripple.If that is the ultimate goal, things could get very interesting over the coming months.
Later this year, the first stage of development is expected to be completed. This does not mean the new digital currency will be tested on a large scale, as it remains up to the Hong Kong Monetary Authority to look at the progress made and decide whether or not further development is warranted. If the project is not up to the standards, the Hong Kong national digital currency may never see the light of day.
It is worth noting the HKMA has been working on various other blockchain-based ventures in the past. They are currently still involved in a proof of concept that has ties to the Bank of China, HSBC, Deloitte, and a few other major financial institutions. Hong Kong is looking forward to embracing new and disruptive technologies, that much is certain.
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