Mastercard, Airstar Bank and KBank Collaborate on e-HKD and Tokenized Deposits Use Cases for Phase 2 of HKMA’s e-HKD Pilot Programme

Initiative explores the usability and adoptability of digital money in today’s financial ecosystem

Mastercard today announced its participation in Phase 2 of the Hong Kong Monetary Authority’s (HKMA) e-HKD Pilot Programme in partnership with Hong Kong’s Airstar Bank and KASIKORNBANK (KBank), one of Thailand’s top five banks. Announced in March 2024, Phase 2 will delve deeper into select pilots from Phase 1 to explore the commercial feasibility of digital money within a real-world setting and evaluate different new forms of digital money that may be made available to the public. In this new phase, the three companies will work together to explore the possibility of supply chain financing using different forms of digital money including e-HKD and tokenized bank deposits, supported by the Mastercard Multi-Token Network (MTN). In addition, Mastercard welcomes the announcement of the launch of Project e-HKD+ that builds upon the foundational work of Project e-HKD and marks a significant advancement in exploring innovative use cases for digital money, including e-HKD and tokenized deposits.

Integrating digital money into supply chain payments will decrease the average transaction time across various industries and improve supply chain resilience through reliable and timely payments, driving efficiency and improved liquidity. These tests will validate the interoperability of networks, both distributed and traditional, by demonstrating the viability of how both solutions can connect to existing and new financial systems and networks. The usability and adoptability of digital currencies and tokenized bank deposits will also be studied.

“Mastercard is pleased to work with Airstar Bank and KBank to explore new ways of alleviating and potentially solving real-world business problems and challenges,” said Helena Chen, Managing Director, Hong Kong & Macau, Mastercard. “This partnership reflects Mastercard’s commitment to developing innovative products locally in support of Hong Kong’s position as a leading financial hub in the region.”

Supply Chain Finance (SCF) represents a significant market opportunity, especially in regions like Hong Kong where it is largely untapped, and where many small and medium enterprises (SMEs) still rely on traditional financing methods. Hong Kong’s role as a financial leader in Asia, combined with its robust trade networks, present a unique unrealized market opportunity for banks to leverage the digital currency to enhance and expand SCF services.

 “Airstar Bank is delighted to partner with Mastercard and KBank to explore innovative use cases for an e-HKD in Hong Kong under HKMA’s e-HKD Pilot Programme,” said Justin Hu, Chief Executive of Airstar Bank. “This collaboration will allow us to explore how e-HKD and tokenised deposits can potentially be effectively implemented in supply chain finance solutions. Airstar Bank remains enthusiastic about FinTech innovations with the potential to improve the efficiency and security of banking transactions.”

Mastercard’s work with e-HKD began in May 2023 when it was selected to participate in the HKMA’s e-HKD Pilot Programme. In November, Mastercard completed Phase 1 of the programme, demonstrating the efficacy of the Mastercard MTN solution to settle Web3 transactions involving decentralized applications and digital assets. Mastercard also showcased the potential for seamless funding and settlement into and out of Web3 marketplaces via e-HKD. In addition, Mastercard demonstrated the ability to use digital currencies across multiple platforms and the potential to utilize existing commercial bank rails to drive overall adoption. In May 2024, Mastercard MTN recorded its first live test in a proof-of-concept pilot exploring the operational and risk management benefits of tokenized deposits to support the settlement of tokenized assets. Mastercard continues to partner with the HKMA and other stakeholders to unlock the potential of new forms of digital money and contribute to the ongoing efforts to establish the technical and legal frameworks necessary for their implementation. With the launch of Project e-HKD+, this will be instrumental in shaping the future of digital payments in Hong Kong, providing new opportunities for both individuals and corporates.