Hong Kong presents prototype of national digital currency

The developers will also release a CBDC-secured stablecoin

24.10.2022 - 14:15

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What’s new? The Bank for International Settlements (BIS) unveiled a prototype of Hong Kong's central bank digital currency (CBDC). The Aurum project was created in collaboration between the BIS Innovation Center, the Hong Kong Monetary Authority (HKMA), and the Hong Kong Applied Science and Technology Research Institute. Aurum includes a wholesale interbank system and a retail e-wallet system. The source code of the project is available to central banks within BIS.

The press release

What is known about the project? The creators of Aurum plan to issue two types of assets: a national digital currency and a CBDC-backed stablecoin circulating in the interbank system. BIS noted:

“The latter is unique in the study of CBDC to date. Privacy, safety and flexibility are core to the system.”

The developers explain that Aurum stablecoin, unlike private stablecoins, takes into account real-time data about the issuing bank's balance sheet. According to the authors, their project can be used by public financial institutions in developing approaches to the regulation of private stablecoins, especially regarding their backing. As with fiat currency, Hong Kong's three financial institutions will be authorized to issue digital coins.

The HKMA previously published a technical paper on CBDC, outlining technical aspects of the asset and policy considerations, including transaction tracking and privacy.

In addition, the Hong Kong Securities and Futures Commission (SFC) said authorities are considering a crypto-regulation bill separate from China that would legalize investment in this asset type for retail investors.

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