The Digital Economy Summit, one of the most prominent innovation and technology events in Hong Kong, was held earlier this month, under the theme “Smarter Technovation for All: Forging a Sustainable Future”.

The forum focused on issues such as the transformative power of smart cities, exploring how cutting-edge technologies and innovative applications are reshaping the urban landscape and modern digital economy through the lenses of sustainability, connectivity, and resilience — all topics that are very relevant nowadays all across the world.

The event was intended to serve as a platform for thought leaders, industry experts and policymakers to collaborate, share insights, and co-create a future where cities thrive as dynamic, livable and forward-thinking hubs of innovation.

The summit showed, among other things, that the concepts of smart cities, sustainability and digital economy are strongly connected.

Some people may think that the idea of smart cities is unrelated to the digital economy, but the truth is that all these areas are much more intertwined with each other than one may think, and the summit reinforced this.

This topic came up at just the right time, as the world faces so many economic challenges this year, and as Hong Kong has now fully reopened since the end of the COVID-19 pandemic and is on its way to becoming a very important Web3 hub in particular, and a digital economy and fintech hub in general.

From a general perspective, Hong Kong is in an exciting position to leverage its prowess to keep increasing its importance as one of the most important digital finance hubs in the world

This event is one more example of the high number of top-notch events being organized in Hong Kong. At the beginning of this month, the city held the Hong Kong Sevens rugby tournament, attracting visitors from all over the world, and many international conferences on finance and business themes have recently been held or are being organized in Hong Kong, including the HSBC Global Investment Summit, held from April 8 to 10. The Hong Kong FinTech Week also attracts many visitors to Hong Kong every autumn.

There are many sessions from the Digital Economy Summit that I would like to highlight, such as the one with Ethan Chen, deputy general manager of the Digital Currency Task Force at Bank of China (Hong Kong) Ltd on how central bank digital currencies (CBDC) empower the development of Hong Kong’s economy, in which he analyzed how CBDCs can enhance payment efficiency, reduce fulfillment costs and uncover new business opportunities.

From a general perspective, Hong Kong is in an exciting position to leverage its prowess to keep increasing its importance as one of the most important digital finance hubs in the world.

More specifically, I would like to focus on how Hong Kong is becoming a Web3 Hub. Hong Kong Financial Secretary Paul Chan Mo-po said at an event last year: “The blockchain technology underpinning Web3 features characteristics in respect of disintermediation, security, transparency, and low cost. It has the potential to solve many difficulties and pain points encountered in finance, trade, business operations and even day-to-day life. Hong Kong is an international financial center and a metropolis attaching importance to innovation and technology, and embracing the megatrend of Web3 development.”

This approach is also consistent with the Hong Kong Monetary Authority’s “Fintech 2025” strategy, which was unveiled in 2021 and with the aim of encouraging the financial sector to adopt fintech comprehensively by 2025, and, in the words of HKMA chief Eddie Yue Wai-man, “promote the provision of fair and efficient financial services” for the benefit of Hong Kong’s residents and its economy.

Indeed, blockchain technology has the potential to transform various aspects of smart cities, such as governance, sustainability, and security. Blockchain can facilitate decentralized decision-making processes, enabling people to participate more actively in the governance of their cities. The United Nations has also recognized the potential of blockchain in running smart cities and has established a working group to explore how blockchain can be applied to urban areas. The UN is interested in blockchain’s ability to provide secure and transparent records of transactions, which can be used to optimize city operations, promote sustainability, and enhance the quality of life for urban residents.

Last year, Chan said that the time was ripe for Hong Kong to invest in the Web3 digital economy despite recent volatility, as competent market players who survived a “burst bubble” can focus on innovation and make significant strides. Shortly afterward, Hong Kong Chief Executive John Lee Ka-chiu said that the city must “dare to become a leader” in Web3 innovation.

Furthermore, while Hong Kong has indeed faced some rough years, its attractiveness has not declined at all, to the point that Hong Kong remains one of the world’s most important financial centers.

Hong Kong is now embracing opportunities from the Guangdong-Hong Kong-Macao Greater Bay Area development, and, by playing a proactive part in China’s 14th Five-Year Plan (2021-25), the Hong Kong Special Administrative Region is unleashing its potential thanks to unreserved support from the central authorities for advancing key strategies to upgrade its superconnector role, including the digital yuan (or eRMB) and environmental, social and governance.

In addition to the huge role that the GBA will play in Hong Kong’s future, we can also mention other opportunities such as fintech development in Hong Kong, the HKSAR’s anticipated entry into the Regional Comprehensive Economic Partnership, and the Connect Schemes.

To sum up, Hong Kong is constantly showing that it has the potential not only to maintain its role as one of the world’s most important financial centers, but to enhance it, thanks to Hong Kong’s international role, expertise in the financial industry and related industries and its ability to tap into newer industries like Web3, all this in the midst of the city’s involvement in the GBA and other relevant projects.

Indeed, while the Web3 industry offers many opportunities, it also needs to be properly regulated, since the right regulations and effective governance protect investors, prevent fraudulent activities within the ecosystem, and provide clear guidance to allow companies to innovate in the crypto economy.

There is also a definite need for an internationally coordinated approach, given that governments, central banks and other financial regulators are limited to the specific territory of their jurisdiction; but the digital space is global, therefore a coordinated approach is needed.

Events like the Digital Economy Summit show us that Hong Kong is at the forefront of the digital economy and also how important it is to create a future where cities thrive as dynamic, livable, and forward-thinking hubs of innovation.

The author is a fintech adviser, researcher and a former business analyst for a Hong Kong publicly listed company.

The views do not necessarily reflect those of China Daily.