The Hong Kong Monetary Authority (HKMA) has announced the launch of Project Ensemble, a groundbreaking initiative aimed at developing a new wholesale central bank digital currency (wCBDC) to support tokenization. This project has the potential to result in the issuance of a live CBDC, provided there is enough interest, according to the HKMA.
Project Ensemble will focus on creating innovative infrastructure for interbank settlement using wCBDC. Initially, the project will concentrate on the tokenization of deposits, specifically tokenized commercial bank money, for use in transactions involving tokenized assets. To kickstart the project, a sandbox will be established to facilitate research and testing.
In addition, the HKMA plans to establish a wCBDC Architecture Community, which will comprise local and multinational banks, key players in the industry, and the HKMA’s CBDC Expert Group. The Expert Group, formed in October, consists of 11 academics from various fields and universities based in Hong Kong. Furthermore, the HKMA aims to involve other central banks and international organizations in the project.
The HKMA’s CEO expressed a warm welcome to global talents and industry players, inviting them to join the exciting journey of tokenization in Hong Kong.
While the announcement did not mention any involvement by the Bank for International Settlements (BIS), it did reference the HKMA’s participation in BIS projects such as Projects mBridge, Dynamo, and Genesis, as well as experiments conducted with local and Chinese banks. Notably, tests were conducted in collaboration with HSBC and Hang Seng using the bank’s in-house CBDC called e-HKD. HSBC and Ant Group were also part of a separate project exploring the use of tokenized deposits for fund transfers within the HSBC network.
In February, the HKMA issued guidance on the sale and distribution of tokenized products that are not regulated by the Hong Kong Securities and Futures Commission. The Commission is currently evaluating the need for a regulatory framework for stablecoins.
In conclusion, the development of a wholesale CBDC through Project Ensemble has the potential to revolutionize the tokenization landscape in Hong Kong. The HKMA’s commitment to collaboration and research signifies a crucial step towards the future of digital currencies.