Hong Kong Launches Wholesale CBDC Project

In Hong Kong, the local financial regulator announced the launch of the wholesale Central Bank Digital Currency (CBDC) project.

Hong Kong Launches Wholesale CBDC Project

The mentioned efforts were named Project Ensemble. This initiative is aimed at supporting the new financial market infrastructure. Appropriate efforts are especially important in the context of the development of the tokenization functional space. The relevant information is contained in a press release from the Hong Kong Monetary Authority (HKMA), which was published last Thursday, March 7.

Project Ensemble is based on the so-called wholesale sandbox, which HKMA will launch in the current year to further research and test tokenization use cases. In this case, such aspects and variations of applying will be considered, such as, for example, settlements of tokenized assets of the real world. In the relevant context, attention will be drawn to green bonds, carbon credits, treasury management, aircraft, charging stations for electric vehicles, and electronic bills of lading.

The HKMA press release notes the potential of the project to be launched in Hong Kong to explore innovative financial market infrastructure (FMI). Separately, attention is drawn to the likelihood that the mentioned infrastructure will eliminate the existing gap between tokenized real-world assets and money in transactions. As part of the project, an advanced modification of FMI will be studied, which will provide consumers with the opportunity to make payments with tokenized money through wholesale CBDC.

During the implementation of Project Ensemble, initial attention will be focused on tokenized deposits, a digital representation of commercial bank deposits issued by financial institutions of the appropriate category and available to the public.

A statement from the central bank of Hong Kong notes that wholesale CBDC as the foundation of tokenized deposits can be used for transactions with tokenized assets, creating additional opportunities for optimization and innovation.

The launch of Project Ensemble was announced at a time when the Bank for International Settlements, financial regulators in many countries of the world, and traditional lenders were exploring various ways to create and further apply tokenized deposits. It is worth noting that in this case, deposits issued by banks are meant.

Currently, the question remains whether advanced initiatives will define competition or coexistence with stablecoins.

Last year, the project Mandala was presented. As part of this initiative, the Bank for International Settlements cooperates with financial regulators. The mentioned project is designed to ease the burden of compliance with policy and regulatory requirements by automating the relevant procedures. This initiative applies to CBDC and tokenized deposits.

Also, the Bank for International Settlements, in cooperation with the financial regulator of South Korea, is testing the possibility of wholesale use of CBDC for tokenized deposits of commercial creditors and the programmability of these deposits.

As we have reported earlier, Spain’s Central Bank Chooses Partners for CBDC Project.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.