HKMA launches a new wholesale CBDC sandbox with full support from HKU’s CBDC expert group members
The Hong Kong Monetary Authority (HKMA) announced today (March 7) the launch of a new wholesale Central Bank Digital Currency (wCBDC) sandbox. HKMA will study its interoperability with tokenised deposits and assets.
Tokenised deposits are the digital form of traditional bank deposits (in terms of digital tokens) issued by licensed and regulated deposit financial institutions, which share similarities with traditional deposit and differ from stablecoins and Central Bank Digital Currency (CBDCs).
Tokenised deposits offer several advantages, such as increased efficiency and cost-effectiveness, as they can be processed securely, quickly, and inexpensively within blockchain networks. Additionally, they promote interoperability and innovative financial products by facilitating the integration of applications across different blockchain networks, such as in cross-border payments.
Since its establishment, five professors from three faculties at the University of Hong Kong (HKU) have joined the CBDC Expert Group under the HKMA. Along with other members of the expert group, the HKU professors have been closely collaborating with HKMA to examine various aspects of CBDCs and related digital currencies, such as interoperability, security, and privacy.
The HKU experts will publish their first joint white paper on CBDC privacy issues and are working on the interoperability issue of digital money, especially wCBDC and tokenised deposits, under various popular models planned to be used by different countries/regions. They will continue to work closely with HKMA and other expert group members in other universities to position Hong Kong as a leader in digital currency and economics, and will further collaborate with a new community with members from banks, technology companies and digital asset industry on the new wCBDC sandbox.
Professor Chen LIN, Associate Vice-President (Faculty Affairs) and Associate Dean (Research and Knowledge Exchange) of HKU Business School supported and remarked: “As founding members of the CBDC Expert Group, we are thrilled to put our academic research into practice and contribute to the remarkable strides in the implementation of wholesale CBDC, a cornerstone of our financial digital infrastructure through the inauguration of the HKMA sandbox for testing tokenised deposits and tokenised assets among banks and the community. As we embrace the digital era, the establishment of a unified ledger as a novel financial market infrastructure will enable us to fully leverage the advantages of tokenisation, propelling Hong Kong towards its continued evolution as a global financial hub.”
Professor David SROLOVITZ, Dean of Engineering, expressed his enthusiasm for the launch of the wholesale CBDC (wCBDC) sandbox and stated: “We are excited about this collaboration with CBDC experts in driving an inclusive financial future in Hong Kong with the introduction of wCBDC sandbox.
This partnership will open up new opportunities for tokenised deposits and assets, as well as harnessing the potential of Digital Asset and privacy-preserving technologies. This initiative exemplifies Hong Kong’s commitment to being a global leader in technological excellence. Leveraging our expertise in Computer Science and FinTech, we endeavour to contribute to the development of a robust and cutting-edge CBDC platform.”
Professor Douglas ARNER, Kerry Holdings Professor in Law, highlighted the importance of CBDC and said: “Over the past three decades, new technologies have transformed money, payments and finance. This can particularly be seen in the evolution of central bank digital currencies and tokenisation in the context of wholesale and institutional finance. This is an area essential to the future of Hong Kong and also one in which the Hong Kong Monetary Authority has emerged as a world pioneer. We are thus very pleased to have the opportunity to support this initiative.”