The Hong Kong Monetary Authority, Bank of Israel, and BIS Innovation Hub Collaborate on CBDC Experiment
The Hong Kong Monetary Authority (HKMA), Bank of Israel (BOI), and Bank for International Settlements Innovation Hub (BISIH) Hong Kong Centre have teamed up to conduct an experiment with a central bank digital currency (CBDC) called Project Sela. This initiative aims to develop an efficient, accessible, and secure CBDC ecosystem while prioritizing privacy and cybersecurity. One key focus of Project Sela is determining the division of roles between the central bank and the private sector. The project envisions a structure where the central bank oversees the ledger and provides accounts to end users, while customer-facing services and compliance are managed by sector intermediaries. Additionally, Project Sela introduces a new category of service providers known as “Access Enablers” (AEs) to manage customer interactions, promoting competition and a diverse range of payment service providers.
Addressing the Division of Roles
In Project Sela, the central bank oversees the ledger and provides accounts to end users, while customer-facing services and compliance are managed by sector intermediaries. This setup is expected to foster innovation, competition, and better service access.
Innovative Access Enablers
Project Sela introduces a new category of service providers known as “Access Enablers” (AEs). These firms manage customer interactions but do not directly control or hold the digital currency. This arrangement eliminates credit risk and relaxes standards for AEs, fostering a more competitive market.
Technological Backbone
Project Sela’s backbone is developed in collaboration with sector service providers such as FIS and M10 Networks. It builds upon the experiences gained from previous projects and establishes a strong foundation for the CBDC ecosystem.
Hot Take: Revolutionizing Financial Systems with CBDCs
Collaborations like Project Sela between Hong Kong and Israel are setting a blueprint for the future as central banks worldwide transition to CBDCs. By balancing innovation, security, and public responsibilities, this partnership could revolutionize financial systems and serve as a model for CBDC implementation globally.
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