Hong Kong completed its CBDC prototype
According to the Bank for International Settlements (BIS), the financial institution in conjunction with its partners has developed a prototype of a two-tier retail CBDC for Hong Kong. The product is called Project Aurum.
The project was carried out in collaboration with the BIS Innovation Hub Hong Kong Center, the Hong Kong Monetary Authority, and the Hong Kong Applied Science and Technology Research Institute. Privacy and security are the key pillars of Project Aurum.
According to a press release issued by the financial institution, the technology focuses on wholesale interbank systems and retail e-wallets. Project Aurum will launch two types of digital assets: intermediated CBDCs (Central Bank Digital Currencies) and CBDC-backed stablecoins. The latter type of digital currency is a unique technology that remains very much unexplored today.
The project is backed up by a 250-page technical manual and source code available to BIS member central banks.
A detailed review of the Aurum prototype, including technical nuances and visualization of the user interface, is available here.
Bringing CBDC-backed stablecoins to life has never been done before and we, therefore, felt that doing so may supplement the growing body of research on private sector stablecoins, stated the project members.
The authors of Project Aurum also note that CBDC-backed stablecoins balances will be reconciled to the gross balance of the Central Bank in real time.
The prototypeās founders believe it will help financial government agencies find a way to regulate āprivateā stablecoins, as well as develop a method to verify that their physical collateral corresponds to the claimed data. Three financial institutions in Hong Kong will be allowed to issue digital currency.
Aurum is the Latin word for gold. The name of the project reflects the idea that digital currencies issued under the supervision of the Central Bank must be as solid and reliable as precious metals.
Hong Kong is one of the largest financial centers in the world. So in March 2021, Hong Kong started its CBDC trials to be in line with the global trend, in particular, to keep up with China, which plans to issue a digital Yuan (e-CNY).
The Hong Kong Monetary Authority announced its intention to start testing its digital Hong Kong dollar (e-HKD) in September 2022. The government agency has also tested international settlements using the central bank digital currency (CBDC) together with the People's Bank of China and the central banks of Thailand and the UAE.
