our previous work in close partnership with the industry. this guidance is critical in an environment where debates on different forms of digital money are proliferating not just in hong kong, but across the globe. we envision that this digital money framework will comprise three key components from the outset. these components are retail cbdcs, regulated stablecoins, and tokenised deposits. retail cbdc today, individuals and corporates alike only have access to digital money issued by private entities. as we are transitioning to a digital economy where most transactions 3 / 6 bis - central bankers'speeches are conducted online, there may be a case for the hkma to provide a digital form of physical cash, that is a retail cbdc, for everyday payments. from a more technical perspective, a retail cbdc could serve as a fundamental layer to facilitate interoperability and interlinking between various entities participating in our future digital economy. it could act as a bridge between different types of privatelyissued digital money, and ensure all private money to be exchangeable with a public money on demand and at par. a dollar is a dollar, regardless of who is issuing the money, and that preserves the " singleness of money ". we also envision that a retail cbdc could be a potential " backbone " and anchor, bridging a legal tender and digital assets, offering price stability and confidence needed to empower more innovations, and developing a vibrant sector and ecosystem for digital assets in hong kong. having said that, while a retail cbdc may represent a more advanced version of cash, it remains to be seen whether the benefits of its issuance would outweigh the risks. more research would also be required on how the introduction of a retail cbdc would impact the broader financial system. given the generally efficient and competitive retail payment ecosystem in hong kong, we will continue to take a usecase driven approach in thinking about whether and when to introduce a retail cbdc. stablecoins for those of you who are familiar with hong kong's monetary system, you would know that we have a relatively unique system, where the government, through the hkma, has given authorisation to three commercial banks to issue banknotes in hong kong. these banknotes are issued against payment to the exchange fund in us dollars. the digital version of this arrangement has been explored as a cbdc - backed stablecoin under project aurum, and some economists have recently called this a " reserve - backed

between a digital public money, like cbdcs, and other forms of digital private money. as central banks embrace these new forms of money, it is crucial for us to enable the right financial innovations to flourish while ensuring that the core financial systems that underpin our economy remain stable, trustworthy, and resilient. sound regulations are 2 / 6 bis - central bankers'speeches essential. and in some areas, we may also need to consider establishing shared infrastructure for public goods, just as we have done with payment systems in the old world. so far as regulations are concerned, a delicate balance has to be struck. too stringent an approach may stifle financial innovation, as the industry becomes overly risk - averse or reliant on the central bank to dictate the direction of innovations. an overly lenient approach, on the other hand, could potentially undermine the central bank's effectiveness as a stable monetary anchor for common citizens, businesses, and financial institutions. this could result in a digital economy dominated by a few closed, privately - run platforms that prevent the emergence of more affordable and efficient solutions. it is therefore crucial to strike the right balance between enabling innovation and maintaining stability. central banks should continue to play their role in the provision of public money serving as a trusted monetary anchor, enabling the private sector to confidently develop innovative, value - adding financial products for consumers and businesses. in this connection, a cbdc should be viewed in the context of these functions of the central bank in the monetary system. to build on the current two - tier structure, central banking institutions like the hkma should underpin the foundation of our payment systems. this is a model that we have explored together with the bis innovation hub in 2022 under project aurum, where wholesale cbdcs will be used by regulated financial institutions, and customer - facing activities will be assigned to the private sector, just like today under a two - tier system. keeping in mind these developments, through the lens of the regulator, it is clear that we need a holistic digital money framework that will facilitate the healthy co - existence of public and private money to support our future digital economy. a digital money framework this digital money framework will encompass different forms of tokenised money, which consumers and businesses will likely see and adopt in the years to come. our intention is to provide the necessary guidance and creative freedom for the industry to experiment with new technologies and develop innovative solutions. this framework is the collation of