The Hong Kong Financial Authority (HKMA) has joined forces with the Financial institution of Israel (BOI) and the Financial institution for Worldwide Settlements Innovation Hub (BISIH) Hong Kong Centre to launch a joint report on “Challenge Sela – An accessible and safe retail CBDC ecosystem”. The report was unveiled at a convention in Tel Aviv on 12 September.
Challenge Sela marks the inaugural collaboration between the 2 central banks within the fintech area. The initiative underscores the technical viability of a retail central financial institution digital forex (CBDC) framework that may foster competitors and innovation in digital funds. That is achieved by allowing non-bank cost intermediaries to hyperlink on to the CBDC ledger maintained by the central financial institution. The prototype, constructed on distributed ledger expertise (DLT), serves as a testomony to how the technical execution of the proposed construction can meet stringent cybersecurity, authorized, and coverage mandates.
Howard Lee, Deputy Chief Govt of the HKMA, commented on the challenge’s significance, stating, “Challenge Sela has supplied invaluable hands-on insights into the cybersecurity, technical, and coverage dimensions of retail CBDC deployment.” He additional added that whereas the HKMA hasn’t finalized its stance on launching an e-HKD in Hong Kong, the findings from Challenge Sela will information their continued analysis.
Andrew Abir, Deputy Governor of the BOI, emphasised the challenge’s function in fostering competitors and innovation. He famous, “If central financial institution funds are to transition to a digital format, cybersecurity stays paramount. Challenge Sela has facilitated a complete dialogue on the cybersecurity sides of CBDC with our collaborators.”
Bénédicte Nolens, Head of the BIS Innovation Hub Hong Kong Centre, make clear the challenge’s exploration right into a CBDC system the place the central financial institution manages the retail ledger. She highlighted the introduction of an “Entry Enabler” middleman, which broadens CBDC entry, thereby stimulating competitors and innovation, with out compromising on cybersecurity or consumer privateness.
The Hong Kong Financial Authority (HKMA) has been exploring Central Financial institution Digital Foreign money (CBDC) since 2017, leveraging Distributed Ledger Applied sciences (DLT). In 2017, the HKMA initiated Challenge LionRock, specializing in large-value funds.
By 2019, in collaboration with the Financial institution of Thailand, they launched Challenge Inthanon-LionRock, which advanced into the A number of CBDC Bridge (mBridge) by 2021, emphasizing real-time cross-border transactions.
In Q3 2022, mBridge underwent a pilot section, settling over HK$171 million in transactions. On the retail entrance, the HKMA is contemplating an e-HKD, with a technical whitepaper launched in 2021 and a place paper in 2022 outlining its three-rail method to implementation.
The Rail 2 – e-HKD pilot programme was launched in November 2022, inviting stakeholders to discover e-HKD functions.
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