Visa completes successful pilot test of Digital Hong Kong Dollar with local banks

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On Nov 1, payments processor Visa announced the completion of the “Digital Hong Kong Dollar” (e-HKD) pilot program conducted with two local banks, HSBC and Hang Seng Bank.

The program was organised by the Hong Kong Monetary Authority (HKMA) to explore the potential for a central bank digital currency (CBDC) in Hong Kong. Visa was selected for the program in May this year.

The e-HKD test marks the world's first implementation of tokenised deposits for conducting inter-bank B2B self-transactions and cross-chain transactions. The objective was to assess the system's atomicity and interoperability. 

The pilot test simulated two interbank business-to-business (B2B) payment process use cases, including property payments and settlements between payment institutions and merchants. It demonstrated B2B payment tokenisation, emphasising advantages including the payment speed, effective risk management, network resilience, and increased transparency of transactions. 

Commenting on the e-HKD pilot program, Liang Puning, Managing Director of Visa Hong Kong and Macau, said, “The HKMA’s pilot program provides Visa with a good opportunity to continue to leverage our strengths and work with our partners to drive payment innovation and test new forms of money movement. This time, the research fully demonstrates that Visa’s payment solutions can be widely used and enable safe money movement, benefiting more citizens, businesses and markets. We are very grateful to work with the Hong Kong Monetary Authority, HSBC and Hang Seng Bank, and look forward to continuing to promote The development of digital payments in Hong Kong.”

Adding to this, Nischint Sanghavi, Head of the Digital Currency Business Unit, Asia Pacific, Visa, said, “Our participation in the actual use cases of the pilot program provides more new discoveries for the application of central bank digital currency. It not only brings reference value to the promotion of the hypothetical digital Hong Kong dollar but also helps shape the future development of the payments ecosystem.”

The test results underscored the advantages of adopting a central bank digital currency, such as faster settlements, a smooth payment experience for high-value transactions, enhanced transaction transparency, and availability of a 24/7 online payment infrastructure. 

The test results demonstrated that the existing banking transaction processes can be enhanced, and B2B transactions can be made more efficient and secure. In the next few years, tokenisation technology could change how banks and digital assets interact and function. 

Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash