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Hong Kong Monetary Authority Launches Wholesale CBDC Project to Develop Local Tokenisation Market

The Hong Kong Monetary Authority (HKMA) has begun ‘Project Ensemble’, a new wholesale central bank digital currency (wCBDC) project, to support the development of the tokenisation market in Hong Kong. 

Through the new project, Hong Kong Monetary Authority will explore innovative financial market infrastructure (FMI) that will facilitate seamless interbank settlement of tokenised money through a wholesale CBDC.

The project will initially focus on tokenised deposits, a digital representation of commercial bank deposits, issued by commercial banks and made available to the general public. With wCBDC as the foundation, tokenised deposits will be used for tokenised asset transactions, hoping to unlock new opportunities for optimisation and innovation in the tokenisation era.

Eddie Yue, chief executive at HKMA, discusses Hong Kong CBDC project
Eddie Yue, chief executive at HKMA

Eddie Yue, chief executive of the HKMA, explained: “Hong Kong has always championed innovation and international collaboration. Project Ensemble will provide fresh impetus to our vibrant financial industry and reinforce our forefront position in tokenised money and assets. We welcome global talents and industry players to come to Hong Kong and be part of this very exciting tokenisation journey.”

As part of Project Ensemble, later this year, HKMA will launch a new wCBDC Sandbox. The sandbox will support further research and test tokenisation use cases that include, among others, settlement of tokenised real-world assets (such as green bonds, carbon credits, aircraft, electric vehicle charging stations, electronic bills of lading and treasury management).

It could forge a new FMI that bridges the gap between tokenised real-world assets and money in transactions.

All eyes on the future 

To set industry standards and a future-proof strategy, 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.

The HKMA will also continue to partner with Cyberport and Hong Kong Science and Technology Parks Corporation to foster the development of asset tokenisation and support homegrown fintech innovation.

Project Ensemble forms a key part of the HKMA’s broader portfolio of initiatives to facilitate the development of the tokenisation market, comprising e-HKD and collaboration with the BIS Innovation Hub Hong Kong Centre such as mBridge, Dynamo and Genesis.

It will also build on the experimentation of tokenised deposit use cases that the HKMA conducted with HSBC, Hang Seng Bank and Ant Group last year. The HKMA will engage relevant international stakeholders, including other central banks and organisations, to join future experiments and exploration in the wCBDC Sandbox.

Should the sandbox garners sufficient interest from the financial industry, the HKMA could eventually conduct a ‘live’ issuance of the wCBDC.

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