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The study involving Chainlink's Cross-Chain Interoperability Protocol is one of many initiatives exploring use cases for a potential Hong Kong CBDC, or e-HKD.
The Hong Kong government is partnering with Chainlink’s Cross-Chain Interoperability Protocol (CCIP) to test cross-border transactions between permissioned and permissionless blockchains, as well as settlements using different types of digital assets.
The partnership is part of Phase Two of Hong Kong’s central bank digital currency (CBDC) initiative. According to a report from payments company Visa, the initiative will involve a hypothetical Australian investor who wishes to purchase a tokenized asset in Hong Kong.
After requesting the purchase in a stablecoin pegged to Australia’s currency, the transaction will be routed via interactions across multiple blockchains. Finally, the purchased asset finds its way into the investor’s wallet, denominated in Hong Kong’s CBDC.
Flowchart illustrates a simulated cross-border transaction between an Australian stablecoin and a Hong Kong CBDC. Source: VisaChainlink’s CCIP plays a role in the communication between different blockchains. According to the company, CCIP is live on dozens of blockchains, including Ethereum Virtual Machine-compatible and Solana Virtual Machine-compatible blockchains. In the case of the Hong Kong study, the Ethereum testnet Sepolia will be used.
The key partners for the study are Visa, as a technology provider, Australia and New Zealand Banking Group (ANZ), and asset managers ChinaAMC and Fidelity International. The study is one of many that the Hong Kong government is commissioning to explore use cases for a possible CBDC.
Exchange between Australian stablecoin and tokenized deposits in Hong Kong CBDC. Source: VisaThis study focuses on examining the interplay between permissioned and permissionless blockchains. Permissioned blockchains are valued for their privacy and controlled environments, which make it easier to enforce compliance and verify user identities. Permissionless blockchains, by contrast, offer broad decentralization and open participation, giving them a strong distribution effect.
The Hong Kong Monetary Authority (HKMA) started Phase Two of the Hong Kong CBDC program on Sept. 23, 2024. During this phase, 11 groups of companies will explore use cases for the CBDC, called e-HKD. The findings from these studies are expected to be published by the end of 2025.
Related: What is a CBDC? Why central banks want to get into digital currencies
CBDC fever appears to be cooling
According to a February 2025 survey, only 18% of central banks around the world are inclined to issue a central bank digital currency, compared to 38% in 2022, indicating that interest in CBDCs may be cooling.
Still, some countries and economic blocs are pressing on with their CBDC plans. In March, Israel released a preliminary design for a digital shekel. In February, the European Union ramped up efforts for CBDC platform development.
Magazine: Asia Express: India mulls new crypto ban to support CBDC, Lazarus Group strikes again
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