HKMA Collaborates With Brazil And Thailand For Tokenization And CBDC Innovation

JAKARTA - The Hong Kong Monetary Authority (HKMA) is in partnership with Banco Central do Brazil (BCB) and the Bank of Thailand (BOT). This collaboration aims to advance cross-border tokenization initiatives and the use of Central Bank Digital Currency (CBDC), as well as increase innovation and security in the financial system. This step is part of efforts to make global transactions more efficient and secure through cutting-edge technology.

This collaboration did not happen suddenly. HKMA previously struck a deal with BCB in 2018 and with BOT in 2019. Now, the two deals are re-discussed with new focus. Through an experimental platform called Ensemble Sandbox, HKMA and BCB will connect their CBDC infrastructure to test cross-border settlement scenarios, such as trading financing and carbon credit trading.

The ensemble Sandbox was launched by HKMA in August 2023, with the aim of conducting joint experiments with industry participants in four key areas: bonds and investment funds, liquidity management, green and sustainable finance, as well as trading financing and supply chains.

This announcement is an important step in a broader context, in which BCB recently introduced the second phase of pilot Drex, in collaboration with more than 70 companies to develop a tokenized financial market in Brazil.

Quoted from Coinspeaker, HKMA CEO Eddie Yue, emphasized that this collaboration has shown promising results. He said, "The Ensemble project is about collaboration with industry partners to advance the tokenization market. In this case, BCB is a very good partner, especially as we share the same vision for the future of the financial industry."

Roberto Campos Neto, Governor of BCB, also highlighted the importance of this collaboration in the new phase of Drex development. According to him, cross-border experiments are critical to creating a well-integrated global financial market. This shows that the two countries are committed to not only focusing on the domestic market, but also trying to connect their financial systems with the international market.

HKMA and BOT, through partnerships that have been established since 2019, have also signed a Memorandum of Understanding (MoU) with a focus on developing a tokenized completion method to improve security and efficiency in financial operations. Howard Lee, Deputy CEO of HKMA, expressed his confidence that the project will provide valuable insights for both jurisdictions.

Lee stressed that HKMA and BOT have the same vision in exploring the use of CBDC for cross-border transactions. "Expanding our partnership to explore the use of cross-border tokenization further confirms this shared vision. Like previous projects, I believe this collaboration will result in valuable insight for both parties," said Lee.