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HKMA partners with central banks in Thailand and Brazil on cross-border tokenization initiatives

The Hong Kong Monetary Authority (HKMA) announced its collaboration with the Bank of Thailand (BOT) to explore cross-border tokenisation use cases under Project Ensemble and Project San.

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The HKMA and the BOT began their fintech collaboration in 2019, with the signing of a Memorandum of Understanding (MoU)2 aimed at fostering financial innovation in both jurisdictions. Since then, the HKMA and the BOT have successfully collaborated on a number of ground-breaking projects, including Project Inthanon-LionRock and Project mBridge.

Building upon this rich heritage of cross-border fintech collaboration, the two central banks will explore Payment versus Payment (PvP) and Delivery versus Payment (DvP) tokenisation use cases, including trade payments and carbon credits. A key aspect of this collaboration will be a proof of concept development, exploring the interoperability of new distributed ledger technology integrated financial market infrastructures (DLT FMIs). In the proof of concept development, the HKMA and the BOT will test a link between DLT FMIs under Project Ensemble and the BOT’s Project San.

The Ensemble Sandbox, launched in August this year, serves as a testing ground for industry participants to conduct tokenisation experiments across four main areas: fixed income and investment funds, liquidity management, green and sustainable finance, and trade and supply chain finance.

The BOT’s Project San, an internal initiative started in June 2024, aims to build and test a prototype for the tokenisation ecosystem. This includes a wholesale settlement engine, EVM-compatible ledgers supporting tokenised private money and assets, and interoperability mechanisms.

Mr Howard Lee, Deputy Chief Executive of the HKMA, said, “The HKMA and the BOT share the same vision for the potential of cross-border applications using central bank digital currency. Expanding our partnership to explore cross-border tokenisation use cases further underscores this shared vision. Same as our previous projects, I am confident that this collaboration will yield valuable insights for both jurisdictions.”

Mrs Alisara Mahasandana, Deputy Governor of Corporate Development at the Bank of Thailand, said, “Through our collaborative efforts in exploring the interoperability of tokenisation, mutual benefits for both Hong Kong and Thailand could be reaped. This partnership will significantly advance tokenisation efforts in our financial sectors, both domestically and cross-border, by offering broader insights into tokenisation, as different technical designs, business requirements, and regulatory frameworks of each jurisdiction will be taken into account."

meanwhile, HKMA announced the collaboration with the Banco Central do Brasil (BCB) to conduct cross-border tokenisation experiments under Project Ensemble and Drex pilot programme. The two institutions will link their experimental central bank digital currency (CBDC) infrastructures, namely the Ensemble Sandbox and the Drex pilot platform, to explore cross-border payment-versus-payment (PvP) and delivery-versus-payment (DvP) settlement use cases in areas such as trade finance and carbon credits.

Building on the Co-operation Agreement1 signed by the HKMA and the BCB in 2018 to foster innovation in financial services across their respective markets, the collaboration follows the announcements by both parties of their latest rounds of experimentations involving CBDCs and tokenised assets. The HKMA launched the Ensemble Sandbox in August this year to conduct experiments with industry participants across four main areas: fixed income and investment funds, liquidity management, green and sustainable finance, and trade and supply chain finance.

Meanwhile, the BCB announced 13 themes for the second phase of its Drex pilot programme in September this year. With the Brazilian CBDC, Drex, as the foundation, the Drex pilot aims to support the development of a tokenised financial market in Brazil. The Drex platform is being developed in co-operation with more than 70 companies, bringing together a diverse set of financial market participants.

Mr Eddie Yue, Chief Executive of the HKMA, said, “The seed of the collaboration between the HKMA and the BCB, planted a few years ago, has now blossomed. Project Ensemble is all about collaboration with industry partners to advance the tokenisation market. In this regard, the BCB is an excellent partner, especially as we share a common vision of driving the future of the financial industry through technology. We are both taking concrete steps to turn this vision into reality.”

Mr Roberto Campos Neto, Governor of the Banco Central do Brasil, said, “The collaboration with the HKMA is an important step of this new phase in the construction of Drex. Participating in cross border experimentation and debates is fundamental to help in the creation of an even better integrated global financial market. Thus, we consider to be symbolic the connection of two jurisdictions on opposite sides of the globe.”

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