The Hong Kong Monetary Authority (HKMA) and the European Central Bank (ECB) have launched a groundbreaking collaboration to explore the digital euro project, marking the first time the ECB has conducted tests outside the European Union.
The HKMA aims to collaborate with the Banque de France (BDF) to test the interoperability between their respective CBDC infrastructures (BDF’s DL3S2 and HKMA’s Ensemble Sandbox).
The focus is on improving the efficiency of real-time cross-border and cross-currency payments, as well as promoting interoperability between financial market infrastructures in different jurisdictions.
Denis Bo, Deputy Governor of the BDF, emphasized the goal of the project, which is to enhance cross-border payments using tokenized forms of the Hong Kong dollar and the euro.
“Pay versus Pay (PvP)” – a mechanism that ensures final settlement in one currency only if payment is made in another currency.
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Hong Kong is updating its cryptocurrency laws with the aim of becoming a fintech hub.
The HKMA’s March project highlighted their commitment to exploring tokenization use cases such as green bonds, carbon credit quotas, and other physical assets.
Edmond Lau, Deputy Chief Executive of the HKMA, expressed optimism about the collaboration with the BDF, stating that it will promote global tokenization and facilitate interconnectivity in financial markets.
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