Hong Kong SAR – HKMA on the results of the Central Bank Digital Currency project with Thailand
The HKMA and the Bank of Thailand (BOT) have published a report on the joint Central Bank Digital Currency (CBDC) research project named Project Inthanon-LionRock. The project looked at the application of CBDC to cross-border payments between Hong Kong SAR and Thailand by using a THB-HKD cross-border corridor network prototype which allowed the participating banks in Hong Kong and Thailand to conduct funds transfers and foreign exchange transactions on a peer-to-peer basis.
The HKMA notes that the results of the report confirm the technical feasibility of implementing practical solutions to address key issues of cross-border payments. The CBDC model in this case was cheaper and gave simple and real-time settlement clock without the need to go through multiple intermediaries or be delayed by different payment message format standards. It also provided greater transparency, including for regulatory bodies who could monitor the network directly and therefore reduced reporting requirements by the banks.
Building on this project, the two authorities have agreed to proceed with further joint research work, including exploring business cases and connections to other platforms, both with the participation of banks and as well as other relevant parties in cross-border funds transfer trials.
This report comes in the same week that several central banks announced that they have created a group to share their experience in assessing the potential cases for central bank digital currency in their home jurisdictions. The group is made up of The Bank of England, the Bank of Canada, the Bank of Japan, the European Central Bank, the Sveriges Riksbank and the Swiss National Bank, together with the Bank for International Settlements. The group will closely co-ordinate with the relevant institutions and forums, in particular the Financial Stability Board and the Committee on Payments and Market Infrastructure. According to the Bank of England press release, the group will assess:
- CBDC use cases;
- economic, functional and technical design choices, including cross-border interoperability; and
- the sharing of knowledge on emerging technologies.