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 Nov. 1 announcement, the e-HKD program involves tokenization of deposits, where the money deposited with a bank is minted on the firm’s own blockchain ledger with the backing of its balance sheet. As part of its key findings, Visa wrote: 

“The time to final settlement for an interbank transfer, as confirmed through our pilot’s testing between the banks, was near real-time. Tokenized deposits were burned on the sending bank’s ledger, minted on the receiving bank’s ledger, and simultaneously settled interbank via the simulated wholesale CBDC layer.”

In addition, Visa said during the pilot that its platform was able to function 24/7, besting traditional payment systems that would not operate after hours or on weekends.

“Our testing was completed using blockchain networks that were available globally and supported by teams in other time zones,” the firm wrote. Meanwhile, the tokenized deposits were transacted through encryption, allowing them to be viewed on blockchain explorers but not revealing the identity of participants, balances, or transaction amounts to non-bank users.

For the next steps, the payment processor says it’s exploring tokenized asset markets and programmable finance. “For example, in this pilot’s ‘Property Payments’ use case, the payment from a buyer transferring the remaining balance tokens to the property developer may be automated upon reaching the completion date of the contract, minimizing lag time in the closure of the process,” Visa wrote. The e-HKD pilot program will enter Phase 2 following the successful results. 

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