The Hong Kong Monetary Authority (HKMA) has introduced a new initiative aimed at helping local banks adopt distributed ledger technology (DLT). The initiative will begin with a focus on tokenized deposits, with the HKMA offering support to banks as they conduct trials.
On January 8, the HKMA launched its “Supervisory Incubator for Distributed Ledger Technology” to assist banks in integrating DLT into their operations securely and effectively, ensuring that they can unlock their full potential.
Arthur Yuen, the deputy chief executive of the HKMA, emphasized the importance of creating an environment conducive to innovation in the evolving banking industry. He described the Supervisory Incubator for DLT as a key part of the strategy to develop safe, efficient, and impactful DLT-based banking solutions for the industry and society at large.
The program has two primary components. First, individual bank support will provide banks with a dedicated central bank team to review and provide feedback on live trials. These trials will focus on testing the bank’s risk management systems before launching full-scale DLT services, with initial efforts concentrated on tokenized deposits.
Additionally, the initiative will encourage industry-wide growth by sharing best practices, offering supervisory guidance, and conducting research to help the broader banking sector better understand and adopt DLT solutions.
The announcement took place during the HKMA’s FiNETech4 event on January 8, attended by over 300 financial professionals.
According to Carmen Chu, Executive Director of the HKMA, as DLT evolves, more advanced methods of managing tokenized assets are expected, including real-time ledger updates, autonomous bookkeeping, and simplified reconciliation processes.
