The Hong Kong Monetary Authority will investigate novel financial market infrastructure (FMI) through the new initiative, which will enable smooth interbank settlement of tokenized funds via a wholesale CBDC.

The project's initial focus will be on tokenized deposits, which are publically available digital representations of commercial bank deposits issued by commercial banks. Tokenized deposits will be used for tokenized asset transactions, with wCBDC serving as the foundation, in an effort to spur new optimization and innovation opportunities in the tokenization age.

In his explanation, Eddie Yue, the HKMA's chief executive, stated: "Hong Kong has always promoted innovation and international collaboration." Project Ensemble will strengthen our leading position in tokenized money and assets and give our thriving financial sector new life. We invite professionals from around the world and industry leaders to Hong Kong to join us on this extremely interesting tokenization adventure.

HKMA will introduce a new wCBDC Sandbox later this year as part of Project Ensemble. Tokenization use cases, including as the settlement of tokenized real-world assets (such green bonds, carbon credits, airplanes, electric vehicle charging stations, electronic bills of lading, and treasury administration), will be tested and supported by the sandbox.
 

It might create a new financial middle layer (FMI) that connects tokenized real-world assets and money used in transactions.

Every eye is focused on the future

The HKMA will establish a wCBDC Architecture Community with technology companies, major actors in the digital asset market, local and global banks, and the CBDC Expert Group in order to create industry standards and develop a strategy that will be viable in the future.

Additionally, in order to promote the growth of asset tokenization and assist domestic fintech innovation, the HKMA will keep working in collaboration with Cyberport and Hong Kong Science and Technology Parks Corporation.
 

Project Ensemble is an important component of the HKMA's larger portfolio of programs, which also includes e-HKD and joint ventures with the BIS Innovation Hub Hong Kong Center on projects like mBridge, Dynamo, and Genesis, to support the growth of the tokenization industry.

Additionally, it will expand upon the tokenized deposit use case experiments carried out by the HKMA with Ant Group, Hang Seng Bank, and HSBC in the previous year. The HKMA will invite pertinent foreign parties to participate in upcoming trials and research in the wCBDC Sandbox, such as other central banks and organizations.

If the financial sector shows enough interest in the sandbox, the HKMA may eventually issue the wCBDC in a "live" market.