Visa, the leading payment processor, has successfully wrapped up its central bank digital currency (CBDC) pilot program with the Hong Kong Monetary Authority, collaborating with banks HSBC and Hang Seng.
Announced on Nov. 1, the pilot for the e-HKD initiative centered around the tokenization of bank deposits. Under this system, funds deposited at a bank get tokenized on that bank’s proprietary blockchain ledger, anchored by the bank’s balance sheet. Visa highlighted one of the primary outcomes of this pilot:
“In our pilot tests involving interbank transfers, the final settlement time was almost instantaneous. Tokenized deposits at the sender’s bank got deburned and were immediately minted on the recipient bank’s ledger. The interbank settlement occurred concurrently via the simulated wholesale CBDC layer.”
Visa’s platform, during the pilot phase, showcased round-the-clock functionality, a significant enhancement over conventional payment systems that shut down post-business hours and during weekends.
The firm elaborated on the underlying technology, stating, “We utilized global blockchain networks, backed by teams from diverse time zones.” Moreover, while these tokenized deposits underwent encrypted transactions and could be traced on blockchain explorers, they ensured the anonymity of the participants, shielding their balances and the specifics of their transactions from the gaze of non-bank users.
Envisioning the road ahead, Visa is setting its sights on markets dealing with tokenized assets and the realm of programmable finance. To illustrate, Visa shared a practical application: “In our ‘Property Payments’ use-case from the pilot, an automated system could handle a buyer’s payment to a property developer, triggering the transfer of remaining balance tokens upon reaching a contract’s completion date. This can vastly reduce the wait times involved in concluding such processes.”
Following these positive outcomes, the e-HKD CBDC initiative is gearing up to advance into its second phase.