The Hong Kong Monetary Authority presented Aurum retail central bank digital currency (CBDC) prototype, reflecting unique monetary policies of the special administrative region
The Hong Kong Monetary Authority and the BIS Innovation Hub unveiled details of their joint CBDC project Aurum. Its unique structure revolves around the intricacies of the existing money issuing system in Hong Kong.
Aurum full-stack solution combines two types of tokens: intermediated CBDC and unique stablecoins backed by CBDC in the interbank system. The created CBDC system consists of a wholesale interbank system and retail e-wallet. Whereas the e-wallet is facilitated by local banks and has a smartphone interface, validator system prevents bank over-issuance and user double redemption.
The e-wallet design is nothing unusual and it uses typical intermediated retail CBDC. However, interbank system will be powered by CBDC-backed stablecoins. The latter will be liabilities of the issuing bank.
Such an original solution digitally mirrors Hong Kong’s existing currency system. Money in the special administrative region are issued by three financial institutions and backed by the central bank.
Hong Kong CBDC wholesale and retail ledgers will be separate, providing the system with a high level of cyber-resilience. Only the intermediary that performs Know Your Customer functions will see the identity of users. The central bank will also be able to track digital currency ownership anonymously through multiple transactions as a safety measure in case of commercial bank bankruptcy.