Visa, the global payment processor, has successfully completed a pilot program for the Hong Kong Monetary Authority's central bank digital currency (CBDC) in partnership with HSBC and Hang Seng Bank, according to a November 1 announcement. The pilot, known as e-HKD, focuses on the tokenization of deposits, a process where funds deposited with a bank are recorded on the institution's own blockchain ledger, which is backed by its balance sheet. Visa reported that during the pilot testing, the final settlement time for inter-bank transfers approached real-time settlement.
The process involves the burning of tokenized deposits on the sending bank's ledger, followed by minting on the receiving bank's ledger, with simultaneous wholesale transactions through the CBDC layer for inter-bank settlements. Furthermore, Visa's platform demonstrated 24/7 operational capabilities, surpassing traditional payment systems that are often restricted to business hours or weekdays. The pilot testing was conducted using globally available blockchain networks, with support from teams located in different time zones.
Visa highlighted that tokenized deposits are transacted via cryptocurrencies, enabling participants to view the transactions on a blockchain browser. However, details such as participant identities, balances, or transaction amounts remain concealed from non-bank users. As for the next steps, Visa is actively exploring tokenized asset markets and programmable finance applications. For example, the pilot introduced a "Property Payment" use case, where the buyer's payment of the remaining balance token to the property developer can be automated upon contract completion, minimizing process closure delays.
The successful completion of the electronic Hong Kong dollar pilot program's first phase indicates a promising path toward advancing the use of CBDCs, with the second phase of the program set to begin after this initial success.
