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BOCHK's Pilot Project to Leverage Smart Contracts for CBDC
The Hong Kong branch of the Bank of China (BOCHK) is currently spearheading a novel pilot project, investigating how the utilization of smart contracts can benefit Hong Kong's prospective Central Bank Digital Currency (CBDC). The upcoming mobile platforms, BOC Pay and BOC Bill Merchant App, are the new tools being used in this pilot.
The primary aim here is the integration of point-of-sale functionality for merchants and simplification of technical roadblocks, thereby sidestepping the need for any supplementary software.
Participants and Project Features of the Pilot Project
The participants of this forward-thinking project include staff at BOCHK and ten businesses from diverse industries. The project boasts a feature that seamlessly transforms customers' prepaid resources into digital Hong Kong dollars (e-HKD) using smart contracts, and this only takes place when specific conditions are met. This was confirmed by Chen Guang of BOCHK's Digital Currency Task Force.
BOCHK’s Earlier CBDC Experiments and Future Plans
The present initiative is an extension of previous BOCHK experiments - with prepaid functionalities - in the wake of the Hong Kong Monetary Authority (HKMA) introducing CBDC pilots for offline transactions and tokenized deposits in May.
In a progressive move, BOCHK enabled cross-border functionalities in July, allowing Chinese visitors to spend digital yuan while in Hong Kong. This served as part of a more widespread objective aimed at financial institutions embracing programmable payments. In a similar vein, a study was recently conducted by HSBC Hong Kong in collaboration with the HKUST Business School.
Nevertheless, HKMA CEO Eddie Yue has signaled a pause on the full-scale launch of e-HKD until critical sector players gain the required experience and approval.
