Banque de France and the Hong Kong Monetary Authority are going to collaborate on a wholesale CBDC project, which will be a backdrop to their ongoing explorations like Project Ensemble.
Central bank digital currencies and tokenization are advantageous use cases of blockchain technology. Meanwhile, an asset tokenization project by the Hong Kong Monetary Authority (HKMA), Project Ensemble, took off this year. With the progress of the project, the regulator has teamed up with Banque de France on another initiative. Both institutions are going to work together on a wholesale CBDC project. The Hong Kong regulator made the announcement in a press release.
Unlike retail CBDCs aimed at the general public, wholesale CBDCs are in use for authorized institutions like banks and financial intermediaries. They represent a digital version of central bank reserves, offering a potential revolution for interbank settlements and financial market operations. Moreover, central banks across the world are exploring this new frontier.
Besides, the press release quoted Denis Beau from Banque de France, who stated, “As we have set the clear objective to improve cross-border payments, we have the opportunity brought by the Eurosystem exploratory work to collaborate with the HKMA on different use cases for payment versus payment between the tokenized form of the Hong Kong dollar and the Euro.”
The French central bank official also mentioned the HKMA’s Project Ensemble, which was reportedly instrumental in this collaboration. Howard Lee from the HKMA mentioned how Project Ensemble will lead to seamless settlements of tokenized money through wholesale CBDCs. Both Lee and Beau recently discussed CBDCs and tokenization at their meeting.
Currently, interbank settlements rely on traditional methods, which can be slow and cumbersome. Wholesale CBDCs promise a faster, more efficient process. Transactions would be recorded on a distributed ledger technology (DLT) platform, enabling real-time settlement and reducing operational costs.
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