- HKMA and BCB connect CBDC platforms to ease cross-border transactions.
- Collaboration enhances trade finance, green finance, and tokenized asset innovation
The Hong Kong Monetary Authority (HKMA) and Banco Central do Brasil (BCB) set a groundbreaking partnership today, October 28, to carry out cross-border tokenization experiments. This cooperation connects HKMA’s Ensemble Sandbox to BCB’s Drex pilot platform. It aims to investigate use cases such as payment-versus-payment (PvP) and delivery-versus-payment (DvP) settlement. Furthermore, it specifically focuses on trade finance and carbon credit markets.
This collaboration builds on a long-standing cooperation agreement established in 2018 between the HKMA and the BCB. The agreement aimed to stimulate innovation in financial services across both markets. The HKMA created the Ensemble Sandbox in August to enable experimentation in four critical areas such as fixed income and investment funds, liquidity management, sustainable finance, and trade and supply chain finance. BCB’s Drex pilot, the cornerstone of Brazil’s emerging CBDC ecosystem, is a collaboration of over 70 companies dedicated to creating a tokenized financial market in Brazil.
Mr. Eddie Yue, Chief Executive of the HKMA, remarked on the alliance, saying, The seed of collaboration between the HKMA and the BCB, planted a few years ago, has now blossomed. Project Ensemble is about working with industry partners to develop the tokenization business. In this regard, the BCB is an outstanding partner, especially given our shared objective of influencing the future of the financial industry through technology.
Strengthening Global Financial Integration
A vital part of this collaboration is a proof of concept that connects DLT infrastructures from the HKMA’s Ensemble Sandbox and the BOT’s Project San. The Ensemble Sandbox, which launched in August, offers tokenization experiments in four areas such as fixed income, liquidity management, green finance, and trade finance. Meanwhile, Project San, BOT’s DLT-based program, is testing tokenization technologies like a wholesale settlement engine and interoperability capabilities.
Howard Lee, Deputy Chief Executive of the HKMA, highlighted the joint commitment of the HKMA and BOT. Together, they aim to leverage central bank digital currency (CBDC) for global applications. He anticipates significant insights will emerge from the tokenization investigation.
Alisara Mahasandana, Deputy Governor of BOT, emphasized the expected domestic and cross-border benefits of the collaboration. She highlighted its significance in uniting technical and regulatory frameworks across countries.
Mr. Roberto Campos Neto, Governor of the Banco Central do Brasil, shared these remarks. He emphasized the necessity of international cooperation in developing a more integrated financial sector. The collaboration with the HKMA represents a significant step forward in the creation of Drex. Campos Neto emphasized that participating in cross-border experimentation and debates is critical to developing a more integrated global financial sector. He believes these efforts will play a vital role in shaping the future of finance.
The linked experimental platforms are expected to pave the way for practical CBDC infrastructure applications in a variety of sectors, highlighting the potential for a more seamless, technologically advanced global financial ecosystem.
