The Hong Kong Monetary Authority’s 2022 Annual Report Highlights Digital Hong Kong Dollar Preparation

According to reports, on April 28th, the Hong Kong Monetary Authority (HKMA) released its 2022 Annual Report. In terms of the digital Hong Kong dollar, it is pointed out that the Monetary Authority will adopt a three track approach to prepare for the possible issuance of digital Hong Kong dollars in the future, and launch a second track pilot plan, inviting the industry to conduct in-depth research on feasible application scenarios of the digital Hong Kong dollar. Yu Weiwen concluded that while we embrace Financial innovation and the benefits it brings, we also need to understand the need to monitor and handle the risks that related development may bring. He said that we are closely monitoring the development of the virtual asset field and participating in international discussions on related regulatory matters. He revealed that after considering the opinions collected from public consultation and relevant international standards, the Monetary Authority will adopt a “same risk, same regulation” approach to develop a regulatory system for stable currencies and define its regulatory scope.

Hong Kong Monetary Authority: The Authority will adopt a three track approach to prepare for the possible issuance of digital Hong Kong dollars in the future

Introduction

On April 28th, 2022, the Hong Kong Monetary Authority (HKMA) published its 2022 Annual Report, which outlines the organization’s achievements and plans for the future. The report covers various aspects of the monetary system in Hong Kong, including the future development of the digital Hong Kong dollar.

Hong Kong Dollar Digitalization Plan

The report states that the HKMA will adopt a three-track approach to prepare for the potential issuance of digital Hong Kong dollars in the future. The first track involves studying the feasibility of the digital currency, while the second track will be a pilot program to delve deeper into possible use cases. Finally, the third track will be the development and issuance of the digital Hong Kong dollar.
Yu Weiwen, the Deputy Chief Executive of the HKMA, emphasized the significance of balancing the benefits of financial innovation with the possible risks involved. Weiwen acknowledged the importance of monitoring and managing the potential risks that digital currency innovation may bring.

Virtual Asset Field Monitoring

The report also disclosed that the HKMA is closely monitoring the virtual asset field and participating in international discussions about regulatory affairs. This participation includes considering the opinions collected from public consultation and relevant international standards to build a regulatory framework for stable currencies and define its regulatory scope.
Weiwen revealed that the HKMA will adopt a “same risk, same regulation” approach to build its regulatory system for stable currencies. This approach is designed to maintain risks at an acceptable level to ensure stability in the financial system.

Pilot Program Invitation

HKMA’s second track – the pilot program, invited the industry to conduct research on feasible application scenarios of the digital Hong Kong dollar. The agency invited several organizations, fintech companies, and financial institutions to participate in developing the digital Hong Kong Dollar by collecting and analyzing data from various users.

Conclusion

The HKMA’s 2022 Annual Report highlights the potential of digital currencies and the agency’s preparation for their future development. The HKMA’s three-track approach, the close monitoring of the virtual asset field, and the “same risk, same regulation” approach to building a regulatory system demonstrate the agency’s dedication to financial stability and security.

FAQs

Q1. What is the Hong Kong Monetary Authority’s three-track approach?

A1. The HKMA’s three-track approach consists of studying digital currency feasibility, conducting a pilot program to analyze possible use cases, and developing and issuing the digital Hong Kong dollar.

Q2. What is the “same risk, same regulation” regulatory approach?

A2. The “same risk, same regulation” approach aims to keep risks at an acceptable level while designing a stable currency regulatory system to ensure financial stability.

Q3. Who did the HKMA invite to participate in its digital Hong Kong Dollar research?

A3. The HKMA invited several organizations, fintech companies, and financial institutions to participate in developing the digital Hong Kong Dollar by collecting and analyzing data from various users.