HSBC and BOCHK back Hong Kong’s wholesale CBDC pilot

Both banks will participate in the pilot project.

Hong Kong’s largest banks welcomed a pilot project exploring a digital payment solution for After-Hours Trading (AHT) sessions in the derivatives market.

On 18 June, the Hong Kong Monetary Authority (HKMA) and the Hong Kong Exchanges and Clearing Limited (HKEX) announced the pilot project, alongside plans to explore the use of wholesale central bank digital currency (CBDC) for advance margin payments.

HSBC will actively engage in the preparatory work on infrastructure and connectivity and support trial transactions as a settlement bank, said Yvonne Yiu, HSBC’s head of global payments solutions for Greater China.

“Real-time, 24/7 operation of CBDC can help reduce payment timing gaps and enable more responsive advance margin deposits during the AHT session,” Yiu said in a statement.

An HSBC survey found that 87% of Hong Kong businesses anticipate faster adoption of digital finance technologies over the next five years, Yiu said.

“By improving the flexibility of advance margin payments, the pilot project can help investors strengthen risk management, while keeping existing operational workflows largely unchanged,” she said.

Bank of China (Hong Kong) welcomed the wholesale CBDC pilot project and said that it will actively engage in the preparatory stage of the project as well as the pilot itself.

“Capitalising on the existing CBDC infrastructure, BOCHK is actively upgrading its systems and optimising operational processes to fully support the smooth implementation of the project,” said Xing Guiwei, deputy executive of BOCHK.

BOCHK will continue to explore the application of CBDC in capital markets, Xing said.