Payment processor Visa has completed the Hong Kong Monetary Authority’s central bank digital currency (CBDC) pilot program with HSBC and Hang Seng Bank.
According to the November 1 announcement, the e-HKD program involves the tokenization of deposits, where money deposited in a bank is minted into the company’s own accounting ledger backed by its balance sheet. As part of its key findings, Visa wrote:
“The time to final settlement of an interbank transfer, as confirmed through our cross-bank pilot testing, was near real-time. Tokenized deposits were burned into the sending bank’s ledger, minted into the receiving bank’s ledger, and simultaneously settled interbank via the simulated wholesale CBDC layer.”
Additionally, Visa said that during the pilot, its platform was able to operate 24/7, outperforming traditional payment systems that do not operate after business hours or on weekends.
“Our tests were completed using blockchain networks that were available globally and supported by teams in other time zones,” the company wrote. Meanwhile, tokenized deposits were transacted through crypto, allowing them to be viewed on blockchain explorers but not revealing the identity of participants, balances or amounts transacted to non-bank users.
For the next steps, the payments processor says it is exploring tokenized asset markets and programmable finance. “For example, in this pilot’s ‘Property Payments’ use case, payment from a buyer transferring the remaining balance tokens to the property developer can be automated upon reaching the contract completion date, minimizing delay time in closure of the process,” wrote Visa. The e-HKD pilot program will enter Phase 2 following successful results.