Last week, the Banque de France (BDF) and the Hong Kong Monetary Authority (HKMA) unveiled a significant partnership focused on the development of wholesale central bank digital currency (CBDC). This collaboration represents the HKMA’s participation in the second phase of the European Central Bank (ECB)’s Eurosystem exploratory work. It marks a pivotal moment as the HKMA becomes a major non-Eurosystem central bank to join this initiative. The announcement follows the recent signing of a Memorandum of Understanding (MoU) between the two institutions, highlighting a commitment to fostering innovation in wholesale CBDC and the tokenization market.
The primary objective of this partnership is to investigate the interoperability between the BDF’s DL3S system and the HKMA’s Project Ensemble Sandbox. This study will concentrate on real-time cross-border and cross-currency payments, aiming to enhance the efficiency of cross-border transactions and facilitate interoperability between financial market infrastructures across different jurisdictions.
Under the terms of the MoU, both the BDF and the HKMA have agreed to bolster communication and collaboration efforts, setting the stage for further advancements in tokenization and the application of new technologies.
Mr Denis Beau, First Deputy Governor of the BDF, remarked that the collaboration within the Eurosystem exploratory work with the HKMA is a significant step towards enhancing cross-border payments. He noted the eagerness to explore various use cases for payment versus payment transactions between the tokenized Hong Kong dollar and the Euro, facilitated by the timely launch of Project Ensemble. The testing of the DL3S platform is anticipated to achieve the financial inclusion benefits that enhanced cross-border payments can bring.
Mr Howard Lee, Deputy Chief Executive of the HKMA, highlighted the immense potential for collaboration between France and Hong Kong, especially in Fintech. He acknowledged that both the BDF and the HKMA have established themselves as frontrunners in the CBDC arena. With Project Ensemble, announced earlier this year, the aim is to create innovative financial market infrastructure for seamless interbank settlement using wholesale CBDC. The joint efforts with the BDF on the interoperability of DL3S and Project Ensemble Sandbox are expected to explore various cross-border payment solutions, promote financial market connectivity, and advance the global tokenization market.
