Hong Kong is stepping up efforts to develop its own central bank digital currency this year, but the regulator has left the nature of the ledger itself – fully centralized or decentralized – up to the banks.
At least one major bank is leaning toward developing an e-HKD on a permissioned blockchain, an official within the bank told CoinDesk.
Unlike the People Bank of China’s e-CNY, the architecture of Hong Kong’s central bank digital currency (CBDC) hasn't been dictated by the central government, said the Hong Kong-based bank official, who was not authorized to speak publicly about the issue.
The regulator has left implementation up to Hong Kong banks. “They are allowed to go and review and research and then propose back,” the source said.
The e-HKD will likely be developed “without the public making a decision as to what they really want,” the source added.
Last year, HKMA issued a discussion paper inviting views on issues surrounding a retail CBDC.
Whether the e-HKD will be issued on a permissioned or permissionless chain has huge security and privacy implications.
On a permissionless chain, while the authorities could require banks to freeze accounts, if the person in question withdraws assets to a self-custody wallet, the authorities cannot seize the assets. On a permissioned chain, the authorities could seize those assets.
Hong Kong is currently a cash-heavy society where hailing a taxi generally requires cash on hand.
UPDATE (April 18, 2023, 13:30 UTC): Updates headline for clarity.
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