BOCHK tests smart contracts in Hong Kong’s CBDC pilot project

Bank of China Hong Kong (BOCHK) is conducting a pilot project to examine the role of smart contracts in the proposed Central Bank Digital Currency (CBDC) of Hong Kong, using its mobile applications BOC Pay and BOC Bill Merchant App. The pilot aims to integrate point-of-sale functionality to lower technical barriers for merchants, thereby eliminating the need for additional software.

Participants in the pilot include BOCHK employees and ten merchants from various sectors. The pilot project has a feature that automatically converts customers’ prepaid funds into e-HKD via smart contracts upon meeting set conditions. Chen Guang of the Digital Currency Task Force at BOCHK confirmed this development.

The current pilot project follows BOCHK’s earlier experiments with prepaid functionalities. These were conducted after the Hong Kong Monetary Authority (HKMA) initiated CBDC pilots involving offline payments and tokenized deposits in May.

In July, BOCHK introduced cross-border functionalities, which allowed Chinese tourists to use the digital yuan in Hong Kong. This move was part of a broader trend of financial institutions exploring programmable payments. For instance, HSBC Hong Kong recently conducted a study involving HKUST Business School staff and students.

Despite these advancements, Eddie Yue, the CEO of HKMA, indicated that a full-scale launch of e-HKD will not proceed until key industry players have gained the necessary experience and clearance.

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