Authorities from Hong Kong, Israel and the BIS released a joint report on the outcomes of Project Sela, an experiment on the retail CBDC ecosystem.
Global authorities have completed Project Sela, a joint effort to explore the retail CBDC ecosystem. The project’s main partners include the Bank of Israel and the Hong Kong Monetary Authority. The Bank for International Settlements (BIS) also joined them.
The project was a private-public partnership with private partners such as M10 Networks and FIS. Clifford Chance joined for the legal aspects. Meanwhile, the cyber security domain was handled by Check Point Software Technologies. A report provided the minute details of the operations of the project.
The experiment tested the proof of concept of a retail CBDC (rCBDC). The project aimed to create such a payment platform with the help of private partners. In doing so, the private sector intermediaries could create an active ecosystem for the rCBDC.
During Project Sela, the central banks were responsible for handling the retail ledger and providing rCBDC accounts to the users. On the other hand, the private operators controlled the customer-facing operations. The intermediary, called the access handler, was the key point for such operations.
The experiment was conducted on the four major factors of cyber security, legal policy, and technology.
Since access handlers did not require many provisions on the regulatory front, the report said, “Lower entry barriers can enable wider participation in the provision of rCBDC services, compared with the existing payments market.”
Users of the project could use financial services without holding accounts in traditional systems like banks. The payment settlements in the project would be done directly by the central banks.