Hong Kong Presents Digital Currency Prototype, Project Aurum – Finance Bitcoin News

Financial authorities in Hong Kong have unveiled a prototype of the Chinese autonomous territory’s own central bank digital currency called Project Aurum. Participants revealed that the two-tier platform includes a wholesale interbank system and a retail electronic wallet system.

Hong Kong will issue retail tokens and stablecoins in the Project Aurum

A collaboration between the BIS Innovation Hub Hong Kong Centre, the Hong Kong Monetary Authority (HKMA), and the Hong Kong Applied Science and Technology Research Institute has produced a prototype of Hong Kong’s upcoming digital currency, the Bank for International Settlements (BIS) announced.

In a press statement, Project Aurum explains that it is a complete-stack front-end and backend central bank digital currencies (CBDC) system. It includes both a wholesale interbank system as well as a retail electronic-wallet system.

Aurum participants want to create two types of digital tokens. One type will be an intermediary digital currency, while the other will be a CBDC supported stablecoin that circulates in the interbank systems. According to the BIS,

This last point is the most important in CBDC research to date. The system is based on privacy, safety, and flexibility.

“Bringing CBDC-backed stablecoins to life has never been done before and we, therefore, felt that doing so may supplement the growing body of research on private sector stablecoins,” the project’s authors elaborate. They further explain that in contrast with private stablecoins, Aurum’s stablecoin balances are reconciled, versus real-time gross settlement balances of the issuing bank with the central bank.

The developers believe that the system of CBDC-backed stablecoins can be used by monetary authorities when they try to work out the regulatory approaches in regard to private sector stablecoins, “especially while seeking to design methods to verify the backing of the stablecoins, a highly topical matter.” Just like with its fiat currency, three of Hong Kong’s financial institutions will be authorized to issue state-backed digital coins.

Hong Kong, one of the world’s major financial centers, has been intensifying efforts to catch up with others on the CBDC development front, including mainland China which has been expanding the digital yuan (e-CNY) pilot. Since March 2021 the Chinese special administrative regions began to explore the possibility of issuing their own CBDC.

The HKMA announced in September that they were preparing to test a digital Hong Kong dollar (eHKD) within the next few months. The monetary authority also took part in trials of cross-border CBDC transactions with the People’s Bank of China and the central banks of Thailand and the United Arab Emirates.

What do you think Hong Kong’s future plans are for its digital currency? Please leave your comments below.

Lubomir Tatsev

Lubomir Tassev is a journalist from tech-savvy Eastern Europe who likes Hitchens’s quote: “Being a writer is what I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.