Through this program, authorized institutions can test AI-driven solutions in a safe environment with an emphasis on useful applications in banking operations. During the testing phase, participants will have access to Cyberport's computer infrastructure and instruction from the HKMA. The regulator wants to learn more from these trials so that it can develop recommendations for the use of AI in the financial industry in the future.

The HKMA is supporting research and development of novel models, as well as the study of AI technologies such as Retrieval-Augmented Generation. The trials will investigate cutting-edge AI applications, including predictive analytics, decision-making assistance, and real-time interactions, with an emphasis on risk management, anti-fraud systems, and improving the customer experience.

The HKMA facilitates cooperation by allowing authorized institutions and fintech startups to form collaborations; Cyberport provides a list of possible partners. The Gen AI Sandbox's first batch of applications is accepting submissions until November 15th. Selected projects will begin in December and should be finished in six months.

The e-HKD pilot's second phase

Furthermore, the HKMA has declared the start of the e-HKD Pilot Programme's Phase 2. As part of the larger Project e-HKD+, this phase looks at possible applications for digital currencies, such e-HKD and tokenized deposits.

For Phase 2, eleven groups have been selected to test various scenarios, including tokenized asset settlement, cross-border payments, and asset tokenization. Visa and ANZ will concentrate on how Australian businesses might use digital currency to invest in funds located in Hong Kong. They will do this by creating tokens backed by cash and enabling cross-border transactions in almost real-time within a sandbox environment.

Following its prior work in Phase 1, where it used tokenized deposits to study interbank payment flows, Visa is now involved in this phase. ANZ will offer its expertise in creating stablecoins and decentralized networks.

Other experiments include HSBC's investigation of safe digital money usage in permissioned distributed ledger technology (DLT) systems for asset storage and transfer, and DBS's attempt to employ digital money for a scalable ESG incentive program. Additional participants will look at how digital money helps with trade financing, including Mastercard, Kasikornbank, and Airstar Bank.