The Banque de France (BDF) and the Hong Kong Monetary Authority (HKMA) have signed a Memorandum of Understanding (MoU) on bilateral collaboration on wholesale central bank digital currency (CBDC) and tokenization. This work is in addition to the numerous larger projects the countries participate in together.

The HKMA and BDF will explore interoperability between their CBDC infrastructures and cross-border transaction settlement efficiency, the HKMA said in a statement. The BDF has infrastructure, called DL3S, in place for the introduction of a CBDC. The HKMA will use the Project Ensemble sandbox for their research.

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So that’s what Project Ensemble is for

The HKMA launched Project Ensemble in March to study asset tokenization and create a CBDC to support it. The agency went on to establish an Architecture Community of Hong Kong regulators, the Bank for International Settlements (BIS), large local banks, HashKey crypto exchange, Ant Digital Technologies and Microsoft Hong Kong. The project was slated to begin research and testing midyear. First Deputy Governor of the BDF Denis Beau said:

“The HKMA’s recent announcement for the launch of Project Ensemble was very timely to initiate this cooperation. We look forward to further testing our DL3S platform in this context.”

The HKMA and BDF are members together of other projects. The HKMA joined the European Central Bank’s second wave of participants in its distributed ledger technology testing the same week as the MoU was announced. Those tests involve interoperability among blockchain modules for settlements of tokenized government bonds.

The e-HKD gets around

The BDF is an observer in Project mBridge, the largest CBDC-related project to date, and HKMA is one of its original participants.

Hong Kong’s CBDC, the e-HKD, has been in the works since 2021 and is now in the second part of its pilot phase. It has been exceptionally active in researching CBDC applications. A retail e-HKD with a complex structure was tested in conjunction with the BIS in Project Aurum. The HKMA has engaged in projects with BIS and the United Nations to develop tokenized “green” bonds and with Ripple and Visa to examine real estate tokenization.

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