Project Aurum, a prototype of the Chinese autonomous territory’s own central bank digital currency, has been introduced by financial officials in Hong Kong. Hong Kong disclose Project Aurum, a digital currency.
Project Aurum will see Hong Kong issue retail tokens and stablecoins
The future digital currency of Hong Kong has been prototyped thanks to a partnership between the BIS Innovation Hub Hong Kong Centre, the Hong Kong Monetary Authority (HKMA), and the Hong Kong Applied Science and Technology Research Institute, according to the Bank for International Settlements (BIS).
The international banking institution described Project Aurum in a news statement this week as a full-stack, front-end and back-end central bank digital currency (CBDC) system composed of a wholesale interbank system and a retail e-wallet system.
Aurum participants aim to introduce two distinct kinds of digital tokens. The first kind will be an intermediary digital currency, while the second type will be an interbank stablecoin backed by CBDC. The BIS noted:
The latter is unique in the study of CBDC to date. Privacy, safety and flexibility are core to the system.
The project’s creators explain, “Bringing CBDC-backed stablecoins to life has never been done before and we believed that doing so may enrich the expanding corpus of research on private sector stablecoins.” They go on to say that unlike private stablecoins, Aurum’s stablecoin balances are reconciled rather than the issuing bank’s real-time gross settlement balances with the central bank.
Three of Hong Kong’s financial institutions will be permitted to issue state-backed digital coins
Just like the city’s fiat currency, and the system of CBDC-backed stablecoins is expected to be used by monetary authorities to develop regulatory strategies for private sector stablecoins, “especially while seeking to design methods to verify the backing of the stablecoins, a highly topical matter.”
One of the major financial hubs of the globe, Hong Kong, has been stepping up its attempts to catch up to others on the CBDC growth front, notably mainland China, which has been extending the digital yuan (e-CNY) pilot. In March 2021, the Chinese Special Administrative Region began looking into the possibility of creating its own CBDC.
The Hong Kong Monetary Authority (HKMA) said in September that it was getting ready to test an electronic version of the Hong Kong dollar (e-HKD) in the upcoming months. The central banks of Thailand and the United Arab Emirates, together with the People’s Bank of China, participated in testing of cross-border CBDC transactions with the monetary authorities.