The announcement on November 1 stated that the e-HKD program will involve tokenizing deposits.
This means that the money deposited with a bank will be minted on the company’s blockchain ledger with the backing of its balance sheet. Visa wrote the following as part of its key findings:
“The time to final settlement for an interbank transfer, as confirmed through our pilot’s testing between the banks, was near real-time. Tokenized deposits were burned on the sending bank’s ledger, minted on the receiving bank’s ledger, and simultaneously settled interbank via the simulated wholesale CBDC layer.”
In addition, Visa stated during the pilot that its platform could function twenty-four hours a day, seven days a week, giving it an advantage over conventional payment systems, which would not operate outside regular business hours or on weekends.
According to what was written on the company’s website, “Our testing was completed utilizing blockchain networks that were available globally and supported by teams in other time zones.”
While this happened, the transactions involving the tokenized deposits were encrypted. This made it so that they could be viewed on blockchain explorers, but it kept the identities of the participants, their balances, and the transaction amounts hidden from non-bank users.
The payment processor has stated that it is investigating tokenized asset markets and programmable finance as the next steps in the process.
“For instance, in this pilot’s “Property Payments” use case, the payment from a buyer transferring the remaining balance tokens to the property developer may be automated upon reaching the completion date of the contract.
This would minimize the lag time in the closure of the process,” Visa wrote in their white paper. After completing phase one with such positive results, the e-HKD Pilot Program will move on to the second phase.