In May of this year, the Hong Kong Monetary Authority (HKMA) started a pilot programme to evaluate the possible applications of the digital Hong Kong Dollar (eHKD). ‘Tokenized property collateral loans’ have successfully passed a pilot test, and a cross-industry coalition led by Hong Kong Telecom (06823), Zhongan Bank, and Boston Consulting Group (BCG) will submit a pilot plan to the HKMA by the end of this month. After Hong Kong Fintech Week, a white paper will be made available. The alliance said that the overall test procedure went without a hitch and expressed confidence that the programme will contribute to transaction cost reduction and lending process acceleration. In the cross-industry alliance, VSFG and paywith.glass are also participants.
Users must first create an account in the “Simulated Digital Hong Kong Dollar” e-wallet offered by HKT Payment, a division of Hong Kong Telecom, in accordance with the process design. They then use the VSFG interface within the app to submit an application for tokenization of their assets (in this case, property). Users can use a portion of the property tokens after getting them to apply for collateral loans at Zhongan Bank. The money is then paid and distributed using the e-wallet provided by HKT. To better control credit risk, loans are now only allowed to be used for pre-approved needs like education and healthcare.
