Hong Kong Monetary Authority (HKMA) Initiates Wholesale CBDC Project

The Hong Kong Monetary Authority (HKMA) has unveiled its ambitious plan to develop a wholesale central bank digital currency (wCBDC) under Project Ensemble, aiming to bolster tokenization within the financial sector. This initiative, as announced by the HKMA, will explore the potential issuance of a live CBDC contingent upon adequate interest from stakeholders.

At the core of Project Ensemble lies the establishment of cutting-edge infrastructure facilitating interbank settlement through wCBDC. Initial efforts will concentrate on the tokenization of deposits, enabling the utilization of tokenized commercial bank money for transactions involving tokenized assets.

Sandbox Development and Research Focus

The project’s inception involves the creation of a sandbox environment dedicated to researching and testing various tokenization use cases. These cases encompass settlement scenarios for tokenized real-world assets such as green bonds, carbon credits, aircraft, electronic vehicle charging stations, electronic bills of lading, and treasury management.

To drive Project Ensemble forward, the monetary authority will assemble a wCBDC Architecture Community comprising local and multinational banks, key industry stakeholders, and the CBDC Expert Group. This Expert Group, established in October, comprises 11 academics from diverse fields and universities across Hong Kong. The monetary authority also intends to engage with other central banks and international organizations to foster collaboration and knowledge exchange.

HKMA Calls for Global Participation

Emphasizing inclusivity, the HKMA’s chief executive expressed openness to global talents and industry players to join the tokenization journey in Hong Kong. This invitation underscores the international scope and collaborative nature of Project Ensemble.

While the announcement did not mention direct involvement from the Bank for International Settlements (BIS), it highlighted ongoing collaborations between the HKMA and BIS in various projects and experiments. Moreover, the HKMA released guidance in February on the sale and distribution of tokenized products, anticipating the evolving regulatory framework, particularly regarding stablecoins, by the Hong Kong Securities and Futures Commission.