HKMA’s Project Ensemble to Propel Tokenisation Market with wCBDC Initiative

HKMA’s Project Ensemble to Propel Tokenisation Market with wCBDC Initiative

by March 7, 2024

The Hong Kong Monetary Authority (HKMA) has announced the initiation of Project Ensemble, a new venture aimed at supporting the development of the tokenisation market in Hong Kong via the introduction of a wholesale central bank digital currency (wCBDC).

This endeavour is set to explore advanced financial market infrastructure (FMI) possibilities that will facilitate straightforward interbank settlements of tokenised funds with the help of wCBDC.

The initial phase of the project will concentrate on the concept of tokenised deposits, essentially digital versions of commercial bank deposits, to be issued by commercial banks for general public use. With wCBDC serving as the foundational technology, these tokenised deposits are anticipated to enhance transactions involving tokenised assets, enabling further optimisation and innovation within the tokenisation sector.

A core feature of Project Ensemble is the establishment of a wCBDC Sandbox, which the HKMA plans to launch this year. This initiative aims to conduct research and test various tokenisation use cases, including the settlement of tokenised real-world assets such as green bonds, carbon credits, among others. This could lead to the creation of a new FMI bridging the current gap between tokenised real-world assets and monetary transactions.

To facilitate the setting of industry standards and the development of a forward-looking strategy, the HKMA will form a wCBDC Architecture Community. This community will consist of a diverse group of stakeholders, including local and multinational banks, digital asset industry leaders, technology companies, and the CBDC Expert Group.

The HKMA also intends to maintain its collaboration with Cyberport and the Hong Kong Science and Technology Parks Corporation to promote asset tokenisation and support local fintech innovation.

Project Ensemble will be positioned as a significant part of the HKMA’s broader strategy to enhance the tokenisation market. This includes projects like e-HKD and collaborations with the BIS Innovation Hub Hong Kong Centre on initiatives such as mBridge, Dynamo, and Genesis.

The project also builds upon the HKMA’s previous work with HSBC, Hang Seng Bank, and Ant Group in 2023, exploring tokenised deposit use cases. The HKMA plans to engage with international stakeholders, including other central banks and organisations, for future experiments and explorations within the wCBDC Sandbox.

Should the wCBDC Sandbox demonstrate sufficient industry interest, the HKMA is prepared to consider a “live” issuance of wCBDC when the time is right.

Eddie Yue

Eddie Yue

Mr Eddie Yue, Chief Executive of the HKMA, commented,

“Hong Kong has always championed innovation and international collaboration. Project Ensemble will inject new momentum into our vibrant financial industry and help maintain our leading position in the realm of tokenised money and assets. We invite global talents and industry participants to join us in Hong Kong on this exciting journey into tokenisation.”


Featured image credit: Edited from Freepik