Beautiful Virgin Islands

Friday, Oct 24, 2025

Hong Kong, Thai central banks closer to using digital currencies for cross-border payments

Hong Kong, Thai central banks closer to using digital currencies for cross-border payments

Plan would let Hong Kong, Thai banks use a CBDC to move funds; Other central banks could join HKMA and Bank of Thailand later
the Hong Kong Monetary Authority (HKMA) and the Bank of Thailand (BoT) announced their findings from a cross border central bank digital currency (CBDC) initiative. The aim was to experiment with circumventing the correspondent banking network, allowing direct payments between banks. Hence this was an institutional or wholesale CBDC experiment. Two commercial banks in Hong Kong and eight in Thailand participated in the research.

The two central banks will continue their joint research, including exploring business cases and connectivity to other platforms. This is a continuation of Thailand’s Project Inthanon research and Hong Kong’s LionRock project.

Typically in correspondent banking, to make cross border payments, a bank will establish accounts at other banks in numerous jurisdictions. The downside is it ties up funds and is a time-consuming administrative burden. For those jurisdictions where it doesn’t have a banking relationship, payments will be routed via another bank, a correspondent bank.

The Asian banks’ work, part of a project begun in July, comes a day after the central banks of Britain, the euro zone, Japan, Sweden and Switzerland said they would jointly study the case for digital currencies.

The People’s Bank of China has progressed the furthest with CBDCs, and the head of its digital currency research institute, Mu Changchun, told a public forum in August that its project was “almost ready”.

The Chinese project focuses on payments within China, unlike the Hong Kong and Thai initiative.

By exchanging CBDC tokens, there is no need for the paying bank to have a bank account at the destination or use a correspondent bank. Bank to bank payments become real-time peer-to-peer payments. In the banking world, this instant settlement is referred to as Payment versus Payment (PvP).

Edmund Lau, Senior Director at the HKMA, commented about how the solution helps to solve the “pain points of low efficiency and high costs in traditional cross-border payments.”

As with other central bank research initiatives, the banks plan to share their results with the rest of the central banking community.

The technology used was R3’s Corda, and the tech partners were CryptoBLK, which has worked on previous iterations of Project Inthanon and Hong Kong consultants CH & Co.

The two Hong Kong banks were HSBC and new online bank ZA. In Thailand, the financial institutions involved were HSBC, Standard Chartered, Bangkok Bank, Krunghthai, Krungsri, Kasikornbank, Siam Commercial Bank, and Thanachart Bank.
How it works

For domestic payments, every country usually has a Real-Time Gross Settlement system (RTGS). So one of the first questions is, how will the cross border CBDC fit in with this? There are two potential models.

The ‘cross-participation’ model allows foreign entities to access to the domestic payment system. The downside of this model is that correspondent banking is likely to persist.

The other ‘asset expansion’ choice is to enable the domestic RTGS to support transactions in both local and foreign currencies. The challenge is for central banks to keep control over their own money supply. Alternative options include setting up a new multi-currency RTGS, or a subset of that, a segregated multi-currency corridor between two countries. The latter was the chosen route for the trial.

So in this selected case, domestic payment systems do not allow access to foreign banks. Each central bank issues its own wholesale CBDC for domestic use. For cross border transactions, each central bank issues (and destroys) Depository Receipts (DR). So a local bank will request an amount of CBDC to be converted to DRs to use in the corridor, which involves the central bank destroying some CBDC and creating the exact same amount of DRs.

The corridor network allows inter-bank payments of DRs by central banks in either of the currencies.

In addition to the primary payment mechanism, the research also allowed for different types of foreign exchange, liquidity management, and regulatory compliance.
Benefits

The conclusion was that settlement efficiency was improved because it involves real-time settlement without correspondent banks. Liquidity is more efficient because CBDC tokens replace Nostro accounts, which usually tie up assets.

From a compliance perspective, transactions are reported in real-time, and it reduces the commercial bank reporting efforts.

Despite only targeting ten banks in one corridor, the conclusion was that the model could be extended for global financial market needs.
Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
Porsche Reverses EV Strategy as New CEO Bets on Petrol and Hybrids
Singapore’s Prime Minister Warns of ‘Messy’ Transition to Post-American Global Order
Andreessen Horowitz Sets Sights on Ten-Billion-Dollar Fund for Tech Surge
US Administration Under President Donald Trump Reportedly Lifts Ban on Ukraine’s Use of Storm Shadow Missiles Against Russia
‘Frightening’ First Night in Prison for Sarkozy: Inmates Riot and Shout ‘Little Nicolas’
White House Announces No Imminent Summit Between Trump and Putin
US and Qatar Warn EU of Trade and Energy Risks from Tough Climate Regulation
Apple Challenges EU Digital Markets Act Crackdown in Landmark Court Battle
Nicolas Sarkozy begins five-year prison term at La Santé in Paris
Japan stocks surge to record as Sanae Takaichi becomes Prime Minister
This Is How the 'Heist of the Century' Was Carried Out at the Louvre in Seven Minutes: France Humiliated as Crown with 2,000 Diamonds Vanishes
China Warns UK of ‘Consequences’ After Delay to London Embassy Approval
France’s Wealthy Shift Billions to Luxembourg and Switzerland Amid Tax and Political Turmoil
"Sniper Position": Observation Post Targeting 'Air Force One' Found Before Trump’s Arrival in Florida
Shouting Match at the White House: 'Trump Cursed, Threw Maps, and Told Zelensky – "Putin Will Destroy You"'
Windows’ Own ‘Siri’ Has Arrived: You Can Now Talk to Your Computer
Thailand and Singapore Investigate Cambodian-Based Prince Group as U.S. and U.K. Sanctions Unfold
‘No Kings’ Protests Inflate Numbers — But History Shows Nations Collapse Without Strong Executive Power
Chinese Tech Giants Halt Stablecoin Launches After Beijing’s Regulatory Intervention
Manhattan Jury Holds BNP Paribas Liable for Enabling Sudanese Government Abuses
Trump Orders Immediate Release of Former Congressman George Santos After Commuting Prison Sentence
S&P Downgrades France’s Credit Rating, Citing Soaring Debt and Political Instability
Ofcom Rules BBC’s Gaza Documentary ‘Materially Misleading’ Over Narrator’s Hamas Ties
Diane Keaton’s Cause of Death Revealed as Pneumonia, Family Confirms
Former Lostprophets Frontman Ian Watkins Stabbed to Death in British Prison
"The Tsunami Is Coming, and It’s Massive": The World’s Richest Man Unveils a New AI Vision
Outsider, Heroine, Trailblazer: Diane Keaton Was Always a Little Strange — and Forever One of a Kind
Dramatic Development in the Death of 'Mango' Founder: Billionaire's Son Suspected of Murder
Two Years of Darkness: The Harrowing Testimonies of Israeli Hostages Emerging From Gaza Captivity
EU Moves to Use Frozen Russian Assets to Buy U.S. Weapons for Ukraine
Europe Emerges as the Biggest Casualty in U.S.-China Rare Earth Rivalry
HSBC Confronts Strategic Crossroads as NAB Seeks Only Retail Arm in Australia Exit
U.S. Chamber Sues Trump Over $100,000 H-1B Visa Fee
Shenzhen Expo Spotlights China’s Quantum Step in Semiconductor Self-Reliance
China Accelerates to the Forefront in Global Nuclear Fusion Race
Yachts, Private Jets, and a Picasso Painting: Exposed as 'One of the Largest Frauds in History'
Australia’s Wedgetail Spies Aid NATO Response as Russian MiGs Breach Estonian Airspace
McGowan Urges Chalmers to Cut Spending Over Tax Hike to Close $20 Billion Budget Gap
Victoria Orders Review of Transgender Prison Placement Amid Safety Concerns for Female Inmates
U.S. Treasury Mobilises New $20 Billion Debt Facility to Stabilise Argentina
French Business Leaders Decry Budget as Macron’s Pro-Enterprise Promise Undermined
Trump Claims Modi Pledged India Would End Russian Oil Imports Amid U.S. Tariff Pressure
Surging AI Startup Valuations Fuel Bubble Concerns Among Top Investors
Australian Punter Archie Wilson Tears Up During Nebraska Press Conference, Sparking Conversation on Male Vulnerability
Australia Confirms U.S. Access to Upgraded Submarine Shipyard Under AUKUS Deal
“Firepower” Promised for Ukraine as NATO Ministers Meet — But U.S. Tomahawks Remain Undecided
Brands Confront New Dilemma as Extremists Adopt Fashion Labels
The Sydney Sweeney and Jeans Storm: “The Outcome Surpassed Our Wildest Dreams”
Erika Kirk Delivers Moving Tribute at White House as Trump Awards Charlie Presidential Medal of Freedom
British Food Influencer ‘Big John’ Detained in Australia After Visa Dispute
×