Coin World News Report:
Banque de France (BDF) and the Hong Kong Monetary Authority (HKMA) have announced a collaboration with a focus on central bank digital currencies (CBDCs) for wholesale purposes and financial asset tokenization.
According to the press release, this collaboration is an important milestone in promoting financial innovation and enhancing interoperability of digital currencies. The HKMA’s involvement in the exploration work of the European Central Bank (ECB) Eurosystem is a significant step forward, making the HKMA one of the first central banking institutions outside the Eurosystem to join the initiative.
Through a Memorandum of Understanding (MoU), the Bank for International Settlements (BIS) and the HKMA aim to promote research on wholesale CBDCs and tokenization. The MoU strengthens communication and cooperation, laying the foundation for the development of new technologies.
Both the BIS and the HKMA are pioneers in the field of CBDCs. The focus of their collaboration is to achieve interoperability between the Civil Defense Force’s DL3S infrastructure and the HKMA’s “Project Genesis” sandbox.
The HKMA’s “Project Genesis,” announced earlier this year, aims to explore innovative financial market infrastructure through interbank settlement using wholesale CBDCs. The experiment aims to optimize the efficiency of international transactions and enhance interoperability between the financial market infrastructures of different jurisdictions.
Recently, there has been a surge in global interest in CBDCs, with 94% of central banks exploring the potential of digital currencies and calling for the adoption of CBDCs to remain competitive with private digital currencies. The Bank for International Settlements (BIS) and the International Monetary Fund (IMF) have become active advocates for CBDCs, emphasizing their role in modernizing the financial system and improving cross-border transaction efficiency.
The BIS also supports tokenization initiatives, which involve transforming physical assets into digital tokens on the blockchain. This process aims to enhance the efficiency, transparency, and security of financial transactions. The BIS’s tokenization projects, such as the Promissa project and the Aurum project, focus on digitizing financial instruments and strengthening the privacy protection of CBDCs.
Currently, most central banks are focusing on wholesale CBDCs, which primarily serve large-scale transactions between financial institutions, rather than retail CBDCs targeting the general public. The possibility of central banks issuing wholesale CBDCs within the next six years is higher than that of retail CBDCs, as some regulatory authorities believe that retail CBDCs could potentially destabilize the financial system.
