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Hong Kong’s move to conduct a wholesale central bank digital currency (wCBDC) pilot will benefit its status as an international financial hub, while also putting Hong Kong on the world map for digital deposits and asset issuance, and attracting talent in the field. This will likely attract market participants. According to Eddie Yue Wyman.
“We have always been at the forefront of the entire blockchain evolution, including CBDC,” Yue, CEO of the Hong Kong Monetary Authority (HKMA), Hong Kong’s de facto central bank, said in an interview with the Post. Told. He added that the wCBDC pilot will set Hong Kong as a benchmark for the latest developments in digital currencies.
“We believe we are one of the first companies to drive the actual implementation of wholesale CBDCs, as well as tokenized assets and tokenized deposit environments,” Yue said.
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Central banks around the world are steering towards innovating future types of money on digital networks, in line with the “unified ledger” vision outlined by the Bank for International Settlements (BIS) last June. .
A unified ledger combines central and commercial bank funds with other assets in a common digital infrastructure, allowing any transaction to be instantly paid, cleared, and settled through tokenization, smart contracts, and programmability. Masu.
wCBDCs are at the core of such systems, as central bank funds used for interbank payments provide reliability and additional functionality enabled by tokenization.
BIS general manager Agustín Carstens said it was “encouraging to see the HKMA’s new wCBDC project supporting development”. [of] That tokenization market.”
Carstens said the ongoing efforts are “well aligned with the vision of a unified ledger where wholesale CBDCs sit at the center of the system, complemented by tokenized deposits from the regulated banking system. “Yes,” he said in an emailed statement to the Post.
On Thursday, the HKMA announced a wCBDC plan called “Project Ensemble.” Under the plan, the HKMA plans to test an ecosystem that includes tokenized deposits, financial instruments, real-world assets, and central bank money for payment purposes using distributed ledger technology.
Agustín Carstens, BIS General Manager. Photo: Dickson Lee alt=Agustin Carstens, BIS General Manager. Photo: Dixon Lee>
The de facto central bank will set up a so-called sandbox to provide a closed loop for a selected group of participants to test innovations, from concept to trading to payments. The sandbox is expected to be officially launched by June.
It also plans to form an “architecture community” to develop common standards.
Several banks, technology companies and digital asset players have announced their participation in the project. These include Hashkey Group, one of the first licensed cryptocurrency exchanges in Hong Kong, HSBC and its subsidiary Hang Seng Bank, and Standard Chartered.
More companies are expected to join the community, including Microsoft and Ant Group’s digital technology arm, the people said, asking not to be named.
The latest project follows other initiatives by the HKMA over the past year, including testing consultation documents on retail CBDC, e-HKD and stablecoins.
”[The HKMA,] “BIS and most central banks believe that tokenization is an important part of the future of financial markets,” Yue said, adding, “The earlier we get there, the more institutions can become tokenized.” “It will provide the infrastructure and environment to issue bonds, funds or real-world assets.” [the faster] they will come to you. ”
Last November, the Bank of Korea launched a retail CBDC pilot program that would allow 100,000 selected Korean citizens to purchase products using deposit tokens. In recent years, the Reserve Bank of India has also introduced the concept of e-rupee.
“Asia is at the forefront of CBDC efforts given its high degree of digitization and vibrant fintech ecosystem, including the payments sector,” Carstens said. This advancement builds on “a deeper understanding of how advances in technology can be leveraged to create more efficient, transparent and inclusive financial systems that benefit society and people.” He added that it was done.
HKMA envisions several use cases for the wCBDC project, which address several pain points in the current market such as limited investment options, high transaction costs and service fees, and long payment processes. It is expected that this will happen.
Yue said the Hong Kong government may issue more tokenized bonds and go through blockchain platforms in the future. He added that the settlement cycle has already been reduced to one day from five days in the previous issue.
Following the e-HKD pilot last May, the HKMA plans to roll out a second phase to explore more “attractive” use cases, focusing on programmability, atomic payments and tokenization, Yue said. said.
Regarding the “mBridge” multilateral CBDC project, the HKMA is actively cooperating with the People’s Bank of China, the central banks of Thailand and the United Arab Emirates, and is preparing for the launch of a viable product.
These moves will enhance “Hong Kong’s international standing” and place the city at “the most progressive front, showing that it is at the forefront of global trends,” Yue said.
“At this point, it is very important to tell Hong Kong’s story.”
This article originally appeared in the South China Morning Post (SCMP), the most authoritative news organization on China and Asia for more than a century. For more stories from SCMP, explore the SCMP app or visit SCMP on Facebook. twitter page. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2024. South China Morning Post Publishers Ltd. All rights reserved.
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