HKMA launches wholesale central bank digital currency initiative
On March 7th, the Hong Kong Monetary Authority (HKMA) announced the launch of “Project Ensemble”, a wholesale central bank digital currency (wCBDC) initiative aimed at supporting the growth of Hong Kong’s tokenisation market.
This project will explore innovative financial market infrastructure (FMI) to enable seamless interbank settlement of tokenised money using wCBDC. The initial focus will be on tokenised deposits, which are digital representations of commercial bank deposits that can be accessed by the general public. By utilizing wCBDC as a foundation, these tokenised deposits can be used for transactions involving tokenised assets, creating new opportunities for optimisation and innovation in the era of tokenisation.
Project Ensemble, led by the HKMA, has a central focus on the wCBDC Sandbox, which will be launched this year for further research and testing of tokenisation use cases. These use cases include the settlement of real world assets in token form; such as green bonds, carbon credits, aircrafts, electric vehicle charging stations, electronic bills of lading and treasury management. The aim is to bridge the gap between tokenised assets and money in transactions by potentially establishing a new FMI.
To support industry standards and future-proof strategies, the HKMA will form a wCBDC Architecture Community consisting of local and multinational banks, key players in the digital asset industry, technology companies and the CBDC Expert Group (Note 1). Collaborating with Cyberport and Hong Kong Science and Technology Parks Corporation will continue to foster asset tokenisation development and support homegrown fintech innovation.
As part of its larger efforts to facilitate the growth of the tokenisation market, Project Ensemble works alongside initiatives like e-HKD and partnerships with BIS Innovation Hub Hong Kong Centre for projects like mBridge (Note 2), Dynamo (Note 3) and Genesis (Note 4). In addition, it builds upon previous experimentation with tokenised deposit use cases conducted with HSBC, Hang Seng Bank and Ant Group in 2023. The HKMA will engage relevant international stakeholders, including other central banks and organisations, to join future experiments and exploration in the wCBDC Sandbox.
An enhanced e-HKD sandbox, leveraged on the wholesale central bank digital currency (wCBDC) sandbox to be built under Project Ensemble, will support Phase 2 (announced March 14, 2024) of the e-HKD Pilot Programme to accelerate the prototyping, development and testing of use cases by pilot participants, as well as facilitate the study of interoperability and interbank settlement between e-HKD and other forms of tokenised money.
Applications for organisations interested in participating in Phase 2 of the e-HKD Pilot Programme are open until May 17, 2024.
Source:HKMA
Note 1: CBDC Expert Group
Note 2: Project mBridge: experimenting with a multi-CBDC platform for cross-border payments
Note 3: Project Dynamo: catalysing innovation for SME growth
Note 4: Project Genesis: prototype digital platforms for green bond tokenisation