The Hong Kong Monetary Authority (HKMA) announced the commencement of Project Ensemble, a new wholesale central bank digital currency (wCBDC) project to support the development of the tokenization market in Hong Kong.
The new project will seek to explore innovative financial market infrastructure (FMI) that will facilitate interbank settlement of tokenized money through wCBDC. The project will initially focus on tokenized deposits, which is a digital representation of commercial bank deposits, issued by commercial banks and made available to the general public.
With wCBDC as the foundation, tokenized deposits can be used for tokenized asset transactions, unlocking new opportunities for optimization and innovation.
At the core of Project Ensemble is a wCBDC Sandbox that the HKMA will launch this year to further research and test tokenization use cases that include, among others, settlement of tokenized real world assets (e.g. green bonds, carbon credits, aircraft, electric vehicle charging stations, electronic bills of lading and treasury management). It could potentially forge a new FMI that bridges the existing gap between tokenized real world assets and money in transactions.
To help set industry standards and a future-proof strategy, the HKMA will form a wCBDC Architecture Community consisting of local and multinational banks, key players in the digital asset industry, technology companies and the CBDC Expert Group. The HKMA will also continue to partner with Cyberport and Hong Kong Science and Technology Parks Corporation to foster the development of asset tokenization and support homegrown fintech innovation.
HKMA will engage relevant international stakeholders, including other central banks and organisations, to join future experiments and exploration in the wCBDC Sandbox. If the wCBDC Sandbox garners sufficient interest from the industry, HKMA will conduct a “live” issuance of the wCBDC at the appropriate time.
Eddie Yue, chief executive of the HKMA, said in a statement: “Hong Kong has always championed innovation and international collaboration. Project Ensemble will provide fresh impetus to our vibrant financial industry and reinforce our forefront position in tokenized money and assets. We welcome global talents and industry players to come to Hong Kong and be part of this very exciting tokenization journey.”