Banque de France Teams Up with Hong Kong Monetary Authority to Propel CBDC and Tokenization Initiatives
Ruholamin Haqshanas
Latest Update:
June 29, 2024, 05:58 EDT
|
Reading Time: 2 mins
A Memorandum of Understanding (MoU) has been inked between the Banque de France (BDF) and the Hong Kong Monetary Authority (HKMA), focusing on fostering bilateral cooperation in the domains of wholesale central bank digital currency (CBDC) and tokenization.
The HKMA has expressed its keen interest in exploring interoperability between their CBDC infrastructures to enhance the efficiency of cross-border transaction settlements, as documented in an official statement.
The BDF has already laid the groundwork with its DL3S infrastructure, paving the way for the potential introduction of a CBDC.
On the other hand, the HKMA will utilize its Project Ensemble sandbox for research endeavors.
Exploration of Asset Tokenization through Project Ensemble
Launched by the HKMA in March, Project Ensemble aims to delve into asset tokenization and develop a CBDC to facilitate such ventures.
This initiative has united various stakeholders, including regulators from the Architecture Community of Hong Kong, the Bank for International Settlements (BIS), prominent local banks, HashKey crypto exchange, Ant Digital Technologies, and Microsoft Hong Kong.
The project is scheduled to kick off research and trial phases in the upcoming months.
Denis Beau, the First Deputy Governor of the BDF, expressed his excitement about the collaboration, highlighting the alignment of timing with the HKMA’s recent announcement concerning Project Ensemble. He also emphasized the BDF’s enthusiasm to carry out further testing of their DL3S platform within this collaborative framework.
It’s noteworthy that the HKMA and BDF are already engaged in joint ventures in other projects.
The HKMA recently became part of the second wave of participants in the European Central Bank’s distributed ledger technology testing, with a focus on interoperability among blockchain modules for settling tokenized government bonds.
Additionally, the BDF is an observer in Project mBridge, the most extensive CBDC-related project to date, in which the HKMA is among the original participants.
Hong Kong’s CBDC, known as the e-HKD, has been in development since 2021 and is now in the second phase of pilot testing.
The HKMA has been actively exploring a range of CBDC applications, such as testing a retail e-HKD with a sophisticated structure alongside the BIS in Project Aurum.
Furthermore, the HKMA has collaborated with BIS and the United Nations for the development of tokenized “green” bonds, in addition to partnerships with Ripple and Visa to delve into real estate tokenization.
Projected $2 Trillion Market for Tokenized Assets by 2030
According to analysts at consulting firm McKinsey & Company, tokenized financial assets are anticipated to reach a market size of approximately $2 trillion by 2030. They even propose an optimistic scenario where the market value could potentially double to around $4 trillion, albeit with a slightly more conservative outlook compared to previous assessments.
Of particular note, tokenized treasuries have seen remarkable growth amidst high yields in a climate of elevated inflation and interest rates in the United States.
The RWA.xyz platform revealed a record $1.29 billion locked in tokenized U.S. treasuries and bonds, denoting an 80% surge since the beginning of 2024.
Contributing significantly to this growth are protocols such as Securitize and Ondo.
Follow Us on Google News
