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. The ultimate goal of the project is to potentially issue a fully operational CBDC, depending on the level of interest received.
The project will primarily focus on building innovative infrastructure for interbank settlement using wCBDC. In its initial phase, the project will establish a sandbox environment to conduct research and testing. This will specifically involve exploring tokenized deposits, which refer to the use of tokenized commercial bank money for transactions involving tokenized assets.
To ensure the success of Project Ensemble, the HKMA will establish a wCBDC Architecture Community, consisting of both local and multinational banks, key industry players, and the HKMA’s CBDC Expert Group. This expert group, formed in October and comprised of 11 academics from diverse fields and universities in Hong Kong, will play a crucial role in shaping the project’s direction. Furthermore, the HKMA aims to engage other central banks and international organizations to participate in this groundbreaking initiative.
The HKMA’s Chief Executive expressed enthusiasm for global talents and industry players to join Hong Kong in this transformative journey towards tokenization.
Notably, the announcement did not mention the involvement of the Bank for International Settlements (BIS). However, it did reference other BIS projects in which the HKMA is already involved, such as Projects mBridge, Dynamo, and Genesis. Additionally, the HKMA has previously conducted experiments with local and Chinese banks, including joint tests with HSBC and Hang Seng using the bank’s “in house” CBDC called e-HKD. HSBC and Ant Group also collaborated on a project exploring the use of tokenized deposits for fund transfers within the HSBC network.
In February, the HKMA released guidance on the sale and distribution of tokenized products that fall outside the regulatory purview of the Hong Kong Securities and Futures Commission. The commission is currently deliberating the establishment of a regulatory framework for stablecoins.
As the world eagerly observes the development of China’s digital yuan, its potential impact on the global landscape remains a topic of both optimism and concern.