The Hong Kong Monetary Authority (HKMA) is examining the development of a regulatory structure for the digital Hong Kong dollar, a stablecoin. Additionally, it is actively advancing distributed ledger technology (DLT) within the financial sector to tokenize bank deposits. In the upcoming quarter, a seminar will be conducted in collaboration with the industry to introduce the applications of DLT technology.
Vice President Ruan Guoheng noted that there isn’t a specific timeline set for the promotion of deposit tokenization, and it will be optional for all banks to adopt this approach. However, the progression of this initiative will not be linked to the ongoing research concerning the digital Hong Kong dollar; instead, the two will be pursued concurrently.
Hong Kong is looking to promote bond tokenization
Chen Jinghong, the Assistant President of Banking Supervision, has voiced a positive outlook on the diverse applications of Distributed Ledger Technology (DLT). He emphasized its potential to streamline bond issuance transaction timelines to T+1 and enable immediate settlement through the tokenization of cash and implementation of smart contracts, thereby mitigating counterparty risks.
While recognizing the current maturity and stability limitations of DLT, Jinghong affirmed the organization’s commitment to ongoing research to address these issues. He envisions a future where not only bonds but also securities, real estate, and mortgage products could be tokenized, illustrating the technology’s transformative possibilities.
Taking note of the evolving financial landscape, Jinghong pointed out the underutilization of wealth and insurance technologies within the banking sector. He anticipates that the cross-border Wealth Management Connect opening will catalyze related technological applications by 30% to 40% over the next three years. Furthermore, he mentioned the “Financial Technology Promotion Plan” spearheaded by the Hong Kong administration, which involves the Securities Regulatory Commission and the Insurance Regulatory Commission providing technical guidelines in alignment with regulatory requisites.
