Hong Kong is actively implementing strategic initiatives to advance digital currencies, aiming to solidify its position as the primary hub for digital currencies in Asia. The upcoming launch of a series of virtual asset indices by the Hong Kong Stock Exchange aims to provide crucial benchmark prices for Bitcoin and Ethereum, addressing valuation differences observed across international exchanges. Concurrently, the Hong Kong government has endorsed an AI policy proclamation to promote the integration of AI technologies in the financial sector and strengthen cross-border payment systems. These coordinated efforts seek to enhance Hong Kong's influence in the global digital currency landscape.

Inauguration of the Virtual Asset Index Series by the HKEX

The Hong Kong Stock Exchange has unveiled plans to introduce the Hong Kong Stock Exchange Virtual Asset Index Series on November 15, 2024. This initiative aims to offer reliable benchmark pricing for the rapidly evolving virtual asset class, reinforcing Hong Kong's status as a key center for digital assets in Asia.

The index series will provide transparent and reliable benchmarks for valuing Bitcoin and Ethereum within the Asian time zone, including reference indices and exchange rates for both cryptocurrencies. The reference indices will be based on the weighted average spot prices of Bitcoin and Ethereum over a 24-hour trading volume, calculated from aggregated market prices from key virtual asset exchanges and denominated in real-time in USD. The reference exchange rates will be tailored for financial product settlements, computed daily at 4:00 pm Hong Kong time. This initiative aims to establish a standardized reference price for virtual assets, correct pricing differentials across global exchanges, enhance market transparency, combat market manipulation and fraudulent activities, and attract capital inflows to the Hong Kong Stock Exchange.

Implementation of AI Policy Declaration in Financial Markets

The government of the Hong Kong Special Administrative Region has issued a policy proclamation regarding the ethical use of artificial intelligence (AI) in financial markets. This strategic approach involves promoting the adoption and advancement of AI in the financial services industry while addressing challenges such as cybersecurity, data privacy, and intellectual property protection. The policy declaration is a clear statement of the government's stance and direction, with the primary goal of responsibly deploying artificial intelligence in financial markets.

Christopher Hui, Secretary for Financial Services and the Treasury of Hong Kong, highlighted that Hong Kong's use of AI exceeds the global average at 38%, emphasizing the government's commitment to guiding the sustainable and responsible evolution of AI in the financial sector through this policy declaration. The core principle of this declaration is responsibility, aiming to leverage Hong Kong's strengths, align with national objectives, engage globally, and attract international stakeholders to Hong Kong's financial technology sector.

Recent Advancements in Cross-Border Payment Systems

Eddie Yue, Chief Executive of the Hong Kong Monetary Authority, revealed that the trial phase for Mainland-Hong Kong cross-border payments and the "Faster Payment System" (FPS) is set to begin in the coming year. Hong Kong's FPS will connect with the Mainland's Interbank Payment System (IBPS) to enable real-time settlement for small payments, allowing round-the-clock interbank payments and fund transfers using phone numbers. The Hong Kong government is currently involved in technical coordination and discussions with the People's Bank of China, focusing on aspects such as exchange rate methodologies, potential limitations, and geographical coverage.Additionally, the Hong Kong Monetary Authority has launched the Ensemble project, a cutting-edge financial market infrastructure based on blockchain technology, showcasing various use cases including tokenized cross-border trade finance.

Hong Kong is actively driving the evolution of digital currencies through a range of initiatives, including the upcoming launch of the virtual asset index series by the Hong Kong Stock Exchange, the AI policy declaration, and enhancements to cross-border payment frameworks, all aimed at solidifying its position as the primary hub for digital currencies in Asia while enhancing the transparency and appeal of its financial markets. These efforts underscore Hong Kong's ambitions in the financial technology sector and its pursuit of a prominent global standing in the realm of digital currencies.