Ripple is set to participate in the digital Hong Kong dollar (e-HKD) central bank digital currency (CBDC) pilot program by showcasing a solution for real estate asset tokenization. The company will reveal its new CBDC platform during this program. Ripple has partnered with Taiwan’s Fubon Bank and others to demonstrate equity release with tokenized assets using a retail version of the e-HKD CBDC. Equity release, also known as a reverse mortgage, is the practice of a lender letting a homeowner access the equity in their home, with payment coming due only when the house is sold or the borrower dies.
Ripple has said that tokenization can reduce friction in the equity release process and speed throughput for banks. The company will participate in the “second rail” of the program, which will focus on “use cases as well as application, implementation, and design issues relating to e-HKD,” according to the Hong Kong Monetary Authority (HKMA). The experiences that will be gained from Rail 2 pilots will be pivotal factors in any decision by HKMA to go live with an e-HKD in the future (Rail 3).
Ripple’s vice president of central bank engagements and CBDCs, James Wallis stated in a written Q&A for Cointelegraph, “All the pilot program partnerships that Ripple previously announced, including Montenegro, Palau and Bhutan, will leverage the CBDC Platform.”
The Hong Kong Monetary Authority started its CBDC research in 2017. According to a recent paper by the HKMA, the e-HKD may not have an immediate role in the current retail payment market, but they believe that prospective use cases for e-HKD can emerge quickly. It is important to note that Ripple’s new CBDC product, the Ripple CBDC Platform, will be used during the program with a new private ledger that uses XRP Ledger technology and enhanced functionality, including offline transactions and non-smartphone use.