CBDCs: HKMA, Bank of Israel Release Joint Report on Project Sela, Focusing on Retail CBDC Implementation


The Hong Kong Monetary Authority (HKMA) has published its joint report on Project Sela. The initiative focused on the cybersecurity, technical, and policy aspects of a retail CBDC implementation.

The HKMA is working with the Bank of Israel (BOI) and the Bank for International Settlements Innovation Hub (BISIH) and have issued the report at an event hosted by the BOI in Tel Aviv today (September 12, 2023).

Specifically, Project Sela looked into the feasibility of a CBDC system where the reserve bank operates the retail ledger and a new type of intermediary, called an Access Enabler, offers wider access to the CBDC, while encouraging competition and innovation.

Howard Lee, Deputy Chief Executive of the HKMA, said they are pleased with the completion of the project which provided practical insights into the technical and policy aspects of a retail CBDC. Lee added that they have not yet made a decision as to whether or not they will issue an “e-HKD” but the initiative will helm the as they continue to explore the possibility.

Bank of Israel Deputy Governor Andrew Abir, explained that competition and innovation require an open ecosystem and many types of service providers.

“ This was our initial goal in Project Sela as a proof-of-concept, and the project proved the feasibility of the model we had in mind. If central bank money is to go digital, cybersecurity is key, and the project provided an opportunity to discuss and study cybersecurity elements of CBDC with our partners. The Bank of Israel is honoured to collaborate with institutions that stand at the frontier of CBDC explorations.”

Bénédicte Nolens, Head of the BIS Innovation Hub Hong Kong Centre, added that the project showed that a CBDC system where a central bank controls the retail legder – along with a new type of intermediary she called the “Access Enabler”  shows what can be accomplished without compromising privacy and security.

Many jurisdictions around the world are investigating the possibility of issuing digital currency. The biggest concerns remain privacy and the potential for central governments to leverage their unique control and insight to instill policy decisions beyond a transfer of value. Some industry insiders believe a regulated, privately issued stablecoin would be a better path – keeping government interactions at arm’s length. Another option is for a CBDC to be made available only for financial institutions.

The report is available on the HKMA website.

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