HKMA Establishes Working Group to Set Standards for Wholesale CBDC Interoperability

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May 8, 2024

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The Hong Kong Monetary Authority (HKMA) on Tuesday formed a working committee in order to set industry standards for wholesale CBDC interoperability. The group also aims to facilitate tokenized asset transactions and interbank settlement using wCBDC.

“It will make recommendations on specific topics, initially focusing on setting up a mechanism to support seamless interbank settlement of tokenized deposit through wCBDC for tokenized asset transactions.”

Dubbed Project Ensemble Architecture Community, the group will assist in the implementation of the Sandbox, slated to launch by mid-2024. The Project Ensemble Sandbox would aid in further research and testing of tokenization use cases, HKMA noted.

Per the announcement, the committee comprises of members who are expert in “contributing to the development of the tokenization market in Hong Kong.”

This includes representatives across various domains such as regulators, banks, academia, crypto firms, among others. Initially it would include the HKMA, the Securities and Futures Commission, the Hong-Kong arm of BIS Innovation Hub, CBDC Expert Group, and private banks and firms such as Hang Seng Bank, HSBC, Standard Chartered Hong Kong, HashKey Group, and Microsoft Hong Kong.

Project Ensemble is a new wholesale CBDC by HKMA, launched in March. The launch aimed to boost Hong Kong’s vibrant financial industry, according to Eddie Yue Wai-man, Chief Executive of the HKMA.

Yue Wai-man emphasized Hong Kong’s commitment to innovation, inviting international collaboration of industry experts to participate in the tokenization.

“Project Ensemble will provide fresh impetus to our vibrant financial industry and reinforce our forefront position in tokenized assets.”

Hong Kong’s e-HKD is in Phase 2

Hong Kong’s central bank has been delving deeper simultaneously into the potential of a CBDC. Last month, HKMA announced that it is launching its phase 2 of its e-HKD pilot program.

As a part of the phase 2 initiative, the central bank invited industry participants to propose potential use cases. The second phase was more into exploring programmability, tokenization, and atomic settlement of a digital Hong Kong dollar.

The HKMA concluded its phase 1 in October 2023, successfully testing the use of e-HKD for various domestic retail purposes, including programmable payments, and offline transactions.