The Banque de France (BDF) and the Hong Kong Monetary Authority (HKMA) have recently entered into a Memorandum of Understanding (MoU) to collaborate bilaterally on wholesale central bank digital currency (CBDC) and tokenization. This endeavor complements the various large-scale projects in which both countries are currently engaged.
As part of this partnership, the HKMA and BDF will investigate the interoperability of their CBDC infrastructures and enhance the efficiency of cross-border transaction settlements, as stated by the HKMA in a press release. The BDF has already established its infrastructure, known as DL3S, to facilitate the implementation of a CBDC, while the HKMA plans to utilize the Project Ensemble sandbox for their research.
The HKMA initiated Project Ensemble in March with the aim of studying asset tokenization and developing a CBDC to support this framework. To advance this initiative, the HKMA formed an Architecture Community comprising regulatory bodies in Hong Kong, the Bank for International Settlements (BIS), prominent local banks, HashKey crypto exchange, Ant Digital Technologies, and Microsoft Hong Kong. Research and testing for the project are scheduled to commence in the middle of the year.
Denis Beau, the First Deputy Governor of the BDF, highlighted the collaborative efforts of the HKMA and BDF in various projects. Notably, the HKMA recently joined the second phase of distributed ledger technology testing conducted by the European Central Bank, focusing on interoperability among blockchain modules for settlements involving tokenized government bonds.
Moreover, the BDF is an observer in Project mBridge, the most extensive CBDC-related initiative to date, with the HKMA being one of the founding participants. Hong Kong’s CBDC, the e-HKD, has been under development since 2021 and is currently undergoing the second phase of its pilot program. The region has been particularly proactive in exploring potential applications of CBDCs.
A specialized retail e-HKD with a sophisticated structure was subject to testing in collaboration with the BIS under Project Aurum. Additionally, the HKMA has partnered with the BIS and the United Nations to develop tokenized “green” bonds and has engaged in endeavors with Ripple and Visa to investigate real estate tokenization.
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