- Hong Kong and Thailand central banks the latest global regulators to announce plans on launching a central bank digital currency (CBDC).
- The joint digital currency project will allow banks across the two countries to exchange funds.
- Top central banks are gaining pace in plans of a CBDC.
According to an official joint press release from the Hong Kong Monetary Authority (HKMA) and the Bank of Thailand (BOT), the two institutions are working on a blockchain that enables efficient transactions between banks in the two countries. The announcement follows up on a 90-page report of the “Project Inthanon-LionRock”, a research on the findings on the possible launch of a joint CBDC between the two institutions.
The launch the Thai-Hong Kong cross-border payment will allow participating banks to transfer funds and settle transactions on a peer-to peer basis. This reduces the overall transaction time and fees building an efficient system to settle in real-time in an “atomic payment-versus-payment manner.” Deputy Governor of the BOT, said,
“Building on pain points and business cases, the novel cross-border model is designed and developed as a Proof of Concept (PoC). The design and key findings of the project have added new dimensions to central bank communities’ studies on cross-border funds transfer area.”
THB-HKD cross-border corridor network prototype was completed in December 2019, and the current launch will be distributed to banks. Mr. Edmond Lau, Senior Executive Director of the HKMA on the launch of the CBDC report said,
“Our joint research project with the Bank of Thailand marks an important first step to solve the pain points of low efficiency and high costs in traditional cross-border payments.”
Hong Kong and Thailand become the latest regulators to focus on CBDCs following China’s PBoC’s announcement of a launch of a sovereign digital currency. Moreover, a consortium of top central banks in the world including the Bank of Japan (BOJ), Bank of England (BOE), Royal Bank of Canada and BIS among others came together to set up a commission earlier this week. The commission will assess the possible use and development of a central bank digital currency (CBDC) within their respective jurisdictions.