Hong Kong to trial wholesale CBDC in interbank settlements

Hong Kong is set to trial a wholesale central bank digital currency (CBDC) for interbank settlements as part of its efforts to develop a tokenization market. The project, known as Project Ensemble, will focus on settling interbank transactions with tokenized deposits. The Hong Kong Monetary Authority (HKMA) has previously experimented with tokenized deposits with Ant Group, Hang Seng Bank, and HSBC. The project aims to explore new use cases for a wholesale CBDC and other financial market infrastructure solutions. If successful, it could lead to the live issuance of a wholesale CBDC. The HKMA also plans to settle tokenized real-world assets like carbon credits and green bonds using CBDCs under the project. The HKMA will establish an Architecture Committee to guide the use of wholesale CBDCs in tokenization and ensure uniform industry standards. This move aligns with global central banks’ interest in exploring asset tokenization for their CBDCs, as failing to do so could result in industry participants turning to alternative settlement assets like stablecoins. The HKMA is leading the way with tokenization projects and will release a playbook for non-regulated tokenized products.