Date: 05 December, 2023
Hong Kong is among the Most Advanced in CBDC Development
In the latest PwC Global CBDC Index, India, Japan, and Hong Kong have emerged as leaders in the world’s most advanced retail central bank digital currency (CBDC) projects. The annual analysis assesses the maturity levels of both retail and wholesale CBDC initiatives based on published speeches and public interest indicators like Google Trends and Baidu Index data.
India takes the lead in retail CBDC development with its Digital Rupee project, engaging in retail and wholesale CBDC pilots launched by the government in November and December 2022, respectively. The focus is enhancing inter-bank market efficiencies, cost savings, and settlement risk management. Thirteen banks participated in India’s retail CBDC pilot as of July 2023, with plans to launch the digital currency nationwide by year-end.
Japan is fourth in the top ten retail CBDC list due to progress in its Digital Yen efforts. The Bank of Japan initiated a pilot program in May 2023 to simulate transactions with private entities. Additionally, Japan ranks tenth in the wholesale CBDC category.
Hong Kong enters the ranking at the eighth position for retail CBDC, driven by significant strides in research. The Hong Kong Monetary Authority (HKMA) released a roadmap for the e-HKD retail CBDC in September 2022, followed by a pilot program in November 2022, exploring various use cases. Hong Kong leads wholesale CBDC development, securing the top spot in the 2023 Top 10 Wholesale CBDC Projects list.
Globally, central banks continue to engage actively in CBDC development. A late 2022 survey by the Bank for International Settlements (BIS) reveals a 93% participation rate, emphasizing the perceived value of both retail and wholesale CBDCs. Motivations include reduced cash usage, financial stability, efficient payments, and addressing the rise of privately issued digital assets.
PwC’s Global CBDC Index and Stablecoin Overview 2023 report, released in November, highlights recent CBDC advancements and delves into the evolving stablecoin market. Stablecoins, designed for stability by pegging to fiat currencies, have become beyond mere volatility shelters, finding applications in various digital markets and decentralized finance services. Despite their potential, stablecoins face regulatory uncertainties and scalability concerns. Global regulators are addressing these issues, with developments like New York’s guidance for USD-backed stablecoins, Singapore’s stablecoin legislation, and the EU’s cross-jurisdictional framework (MiCA) expected to take effect in December 2024.
Key Points:
• India, Japan, and Hong Kong were identified as top performers in the PwC Global CBDC Index.
• India leads in retail CBDC with the Digital Rupee project.
• Engaged in both retail and wholesale CBDC pilots launched in late 2022.
• Japan secures the fourth position in the retail CBDC list.
• Bank of Japan initiated the Digital Yen pilot in May 2023, simulating transactions with private entities.
• Hong Kong enters the eighth position in retail CBDC, driven by notable research strides.
• HKMA released a roadmap for e-HKD in September 2022, followed by a pilot program in November 2022.
• Hong Kong leads wholesale CBDC development, topping the 2023 Top 10 Wholesale CBDC Projects list.
• Worldwide, central banks are actively involved in CBDC development, with a 93% participation rate, according to a late 2022 BIS survey.
• Motivations include reducing cash usage, ensuring financial stability, improving payment efficiency, and addressing the rise of privately issued digital assets.
• November report highlights recent CBDC advancements and explores the evolving stablecoin market.
• Stablecoins, designed for stability, now serve various digital markets and decentralized finance services.
• Regulatory uncertainties and scalability concerns are challenges stablecoins face, with global regulators addressing these issues.
References:
https://fintechnews.hk/24262/blockchain/cbdc-in-asia-hong-kong-japan-india/
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