A recent pilot under the HKMA’s e-HKD+ initiative has explored the use of digital currencies in cross-border investment transactions.

The Simulation

This test involved converting an AUD-backed stablecoin into a Hong Kong central bank digital currency (CBDC) and using it to purchase a tokenised money market fund.

The exercise was conducted in partnership with financial institutions such as ANZ, Fidelity International, and ChinaAMC. The ANZ’s proprietary blockchain, DASChain, was connected to Ethereum’s public testnet via Chainlink’s Cross-Chain Interoperability Protocol (CCIP).

Interoperability Tool

The use of CCIP facilitated the smooth transfer and conversion of digital assets between private and public blockchain environments.

Digital Assets in Use

A$DC, issued by ANZ, was used as the stablecoin, while e-HKD provided access to investment products. Visa’s Tokenized Asset Platform (VTAP) managed the lifecycle of digital money, and Chainlink’s infrastructure handled smart contracts for transaction settlement under payment-versus-payment (PvP) and delivery-versus-payment (DvP) mechanisms.

On-Chain Identity Verification

The trial also included on-chain identity verification and explored token issuance using both ERC-20 and ERC-3643 standards to assess regulatory compliance and security.

Asset managers involved in the project highlighted how these digital money mechanisms could streamline the investment process, potentially reducing settlement time from days to seconds. This enhancement supports continuous operations outside standard business hours, including weekends and public holidays.

Expanding Use Cases

The broader context of the pilot reflects growing institutional interest in tokenised asset markets, which are expected to exceed USD 2 trillion by the end of the decade. The HKMA’s ongoing e-HKD+ programme builds on prior research and experiments in programmable money, expanding its scope to include use cases involving tokenised bank deposits and transactions across multiple blockchain types.

Benefits Highlighted

Officials from Fidelity and ChinaAMC, who have previously issued tokenised funds, noted that programmable digital currencies could reduce back-office complexity and increase access to investment products.