DBS Bank ( Hong Kong ) Limited has completed a pilot in Phase 2 of the Hong Kong Monetary Authority’s ( HKMA ) e-HKD Pilot Programme.

The pilot highlights DBS’s active role in supporting HKMA’s exploration of the digital money ecosystem, seeking innovative applications for new forms of digital money, including e-HKD and tokenized deposits.

The pilot is powered by DBS Token Services, the bank’s suite of services that integrate tokenization and smart contract capabilities with its transaction banking services.

DBS piloted the use of Purpose Bound Money ( PBM ) technology to attach specific spending conditions to an e-HKD. In partnership with Zero2, an environmental, social, and governance ( ESG ) rewards platform created by Negawatt Utility Limited, the pilot issued PBM-based digital vouchers to participants when they complete green actions.

These vouchers were programmed for spending at designated merchants. Once the vouchers’ use is verified, merchants instantly receive payments in the form of hypothetical e-HKD at the point of sale, which could then be off-ramped to HKD via the Faster Payment System ( FPS ), thereby streamlining voucher settlement and reconciliation.

Rewards programme

A recent DBS Hong Kong survey of over 100 SMEs revealed that nearly half ( 45% ) are interested in adopting ready-to-use digital platform to simplify the tracking and rewarding of staff’s participation in green initiatives. This signifies a growing demand for customizable digital platforms that boost employee engagement and amplify ESG efforts, the bank says.

Beyond rewards programmes, the use of tokenized money extends to treasury management, supply chain payments, and improving governance in payment processes, DBS adds.

DBS Hong Kong plans to release a detailed report later this year, outlining the benefits for all stakeholders and other key findings, in alignment with HKMA’s report of the e-HKD programme.

The e-HKD Pilot Programme is part of HKMA’s Project e-HKD+.  Under Phase 2, 11 groups of firms from various sectors have been selected to explore innovative use cases for e-HKD and tokenized deposits across three main themes – settlement of tokenized assets, programmability, and offline payments.   

The selected firms are also looking into the commercial feasibility, within a real-world setting, of new forms of digital money that may potentially be accessible to individuals and corporates.