Tokenization and CBDCs Could Boost Hong Kong's GDP

Experts predict a significant increase in Hong Kong's gross domestic product (GDP) in the coming years, thanks to tokenization and the potential transition to central bank digital currencies (CBDCs).

These forecasts stem from a recently completed e-HKD pilot involving the Boston Consulting Group (BCG), Hong Kong Telecom, and ZA Bank, focusing on the tokenization of real assets. The study demonstrated the potential for improving the digital economy of the Special Administrative Region (SAR) of Hong Kong through the tokenization of real estate and other assets.

BCG's report suggests that the combination of digital assets could lead to a significant increase in the region's GDP. It is estimated that by 2032, the increase in GDP could reach HK$160 billion (US$20.5 billion). However, BCG notes that these forecasts may be hindered by a lack of necessary infrastructure to support tokenization.

The BCG report also emphasizes the need for regulatory support for digital currencies and tokenization initiatives by the Hong Kong administration.

Tokenization, especially of real estate, has the potential to unlock assets worth up to $29 trillion. Other areas that could contribute to economic growth include money distribution, full support for Web3 initiatives, and the exploration of cross-border transactions.

Hong Kong is also continuing its work on its CBDC plans, completing the first phase of the e-HKD pilot. Currently, the central bank is preparing for the second phase of studies focusing on programmability, atomic settlement, and tokenization.

Despite the progress of CBDCs, Hong Kong has achieved success with stablecoins and tokenized deposits due to robust regulations and innovative experiments.

However, BCG's attempt at property tokenization highlighted many challenges, such as legal issues and transaction registration in the land registry.

*this is not financial advice