Hong Kong launched a project collection to support tokenization with wCBDC

The Hong Kong Monetary Authority (HKMA) is launching a project to create a new wholesale central bank digital currency (wCBDC) to support tokenization. A set of projects posted, if there is sufficient demand, could lead to the issuance of a “live” CBDC, the HKMA said in an announcement.

The project will focus on inter-bank innovation infrastructure using wCBDC. The initial focus will be on tokenized deposits, i.e. using commercial bank money for transactions with tokenized assets. The first step in the project is to create a sandbox that examines and tests:

“Tokenization use cases include, among others, tokenized real-world assets (e.g., green bonds, carbon credits), aircraft, electric vehicle charging stations, electronic utility payments, and treasury management.”

HMA was established in October and will comprise the wCBDC architecture community of 11 academics from various fields and universities in Hong Kong, local and multinational banks, “key players” and the HKMA CBDC Expert Group. . In addition, the HKMA seeks the participation of other central banks and international organizations.

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HKMA CEO said: “We welcome international talents and industry players to come to Hong Kong and be a part of this very exciting tokenization journey.

Although the announcement mentions the BIS projects that HCMA is already involved in, such as projects mBridge, Dynamo and Genesis, and its trials with local and Chinese banks, the announcement does not indicate any involvement in the bank's international settlement. The tests, conducted in conjunction with HSBC and Hang Seng, included tests conducted using the bank's e-HDD “in-house” CBCC. HSBC and Ant Group are involved in another project involving the use of tokenized deposits to transfer funds within the HSBC network.

The HKMA issued guidelines on the sale and distribution of tokenized products that are not regulated by the Hong Kong Securities and Futures Commission in February. The latter body is currently considering a regulatory framework for stablecoins.

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