HKMA And Banqe de France Begin Cross-Border CBDC Project
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The Banque de France (BDF) has agreed with the Hong Kong Monetary Authority (HKMA) to check how their different systems can support cross-border transactions. They will focus on utilizing wholesale central bank digital currencies as part of their initiative. This partnership is based on their previous work in the European Central Bank’s Eurosystem CBDC research project.
Banque de France Reveals Plans To Test Cross-Border Transaction Solutions
The interoperability research will involve Banque de France’s distributed ledger for DL3S, the securities settlement system, and the Hong Kong Monetary Authority’s Ensemble Sandbox. The Sandbox was unveiled this year, enabling the regulator to test and study tokenization use cases.
According to the report, the Central Bank announced that the test will focus on real-time cross-currency and cross-border payments. The Banque de France and the Hong Kong Monetary Authority will work on speeding up settlements. They will do this by making financial systems in different countries work better together.
Beau added both entities will check out diverse use cases for payment versus payment involving the digital version of the Euro and Hong Kong dollar.
The Eurosystem includes the European Central Bank and 20 more central banks across the European Union. It first announced the arrival of its exploratory project in April 2023. This initiative analyzes how wholesale financial transactions recorded on distributed ledger technology platforms could be settled using the central bank’s digital currencies.
The European Union Reports Sets Of Participants For The Latest Project
In April, the European Union revealed the first set of participants in the latest project, including the Banque de France. Later, in June, the second batch was released. This set included the Hong Kong Monetary Authority, which was selected as a central bank DLT operator.
The group will look into the test settlement of domestic payments and foreign exchange Payments versus Payment transactions from July to November. It will also examine “a wide range of securities-related use cases,” as stated in the European Central Bank’s June announcement.
The Hong Kong Monetary Authority’s Deputy Chief Executive, Howard Lee, the agency is dedicated to working with the Banque de France. Howard mentioned that both groups want to create new cross-border payment solutions and study different use cases together. This will help the financial market connect better and boost the growth of the global tokenization market.
As the Exchange Fund Ordinance mandates, the authority must support the Financial Secretary and be HKSAR’s primary financial system regulator. It makes and enforces rules to fight money laundering and terrorism financing. It also ensures that the banking system stays secure against possible issues.
