Hong Kong’s banking watchdog will conduct tests on the operation of the tokenization of HK$1.3 trillion worth of Exchange Fund bills by year-end to boost the efficiency of asset and liability management, Chief Executive John Lee Ka-chiu said.
The tests will facilitate lenders in further harnessing the advantages of tokenization technology to make efficient, round-the-clock use of the bills.
The government will regularize digital bond issuance to drive innovation, such as using digital currencies for settlement and exploring their full-cycle application for digital bonds, including dividend payment and redemption, Lee said.
Hong Kong accounted for nearly 50 percent of the world’s newly issued digital bonds between 2025 and the first half of 2026, and the government will work to broaden use cases and secure the leading position in the area, he noted.
A digital asset platform will be established by CMU OmniClear this year to provide one-stop service in areas such as the issuance and settlement of digital bonds, Lee said.
The Hong Kong Monetary Authority’s tokenized bond expert group will explore innovative solutions and launch its second-phase legal review in collaboration with the Financial Services and the Treasury Bureau to facilitate the application of Distributed Ledger Technology (DLT) in the capital market.
Hong Kong Exchanges and Clearing (0388) may include a new reference rate under Swap Connect in the fourth quarter of this year, which will reflect interbank financing costs in the mainland and will help global investors manage yuan interest rate risks.
HKEX will also explore the introduction of a central clearing mechanism for bond repurchases to enhance market liquidity.
