Hong Kong Bank and Bank of Israel Form Partnership to Trial CBDC

Crypto News– The Hong Kong Monetary Authority (HKMA), in collaboration with the Bank of Israel (BOI) and the Bank for International Settlements Innovation Hub (BISIH) Hong Kong Centre, has initiated Project Sela, an ambitious venture aimed at exploring the realm of central bank digital currencies (CBDCs). Project Sela aspires to craft a robust, accessible, and secure CBDC ecosystem while keeping paramount concerns such as privacy and cybersecurity at the forefront of its development.

Hong Kong Bank and Bank of Israel Form Partnership to Trial CBDC

A central focal point within Project Sela revolves around the allocation of responsibilities between public and private sectors. This pioneering initiative envisions a structure wherein the central bank maintains ledger oversight and extends accounts to end-users while customer-facing services and compliance fall under the purview of sector intermediaries. Those familiar with the project assert that this innovative approach will foster competition, innovation, and improved accessibility.

Pioneering Access Enablers

Project Sela’s proposed framework introduces a groundbreaking category of service providers known as “Access Enablers” (AEs). These specialized entities handle customer interactions but do not directly control or hold digital currency. Such an arrangement mitigates credit risk, as all transactions are settled directly on the central bank’s balance sheet, which retains ultimate responsibility for the currency. This approach relaxes standards for AEs, potentially ushering in a more diverse range of payment service providers and fostering a highly competitive market.

Elevated Cybersecurity Focus

The emphasis on cybersecurity within Project Sela arises from the realization that enhanced accessibility may be accompanied by increased risks. By leveraging Israel’s expertise in cybersecurity and drawing insights from ongoing projects in Hong Kong, the primary aim is to ensure that security remains uncompromised while reaping the benefits of heightened accessibility.