Hong Kong unveils completed retail CBDC project that has CBDC-backed stablecoin
The Hong Kong Monetary Authority and BIS Innovation Hub have cooperated on a unique CBDC design that reflects the realities of issuing currency in the special administrative region.
New
On October 21, the Hong Kong Monetary Authority unveiled its prototype digital currency from central retail bank Aurum (CBDC). The system, developed in conjunction with the Bank for International Settlements (BIS) Innovation Center, has a unique structure that mirrors the intricacies of the existing system for issuing money in Hong Kong.
Aurum consists of a wholesale interbank system and a retail electronic wallet. The electronic wallet is created in a local bank and has a smartphone interface. A validation system prevents bank overissue and double reimbursement by the user.
Intermediated retail CBDC is used in e-wallets, and CBDC-backed stablecoins are used in the interbank system. The unusual CBDC-backed stablecoins digitally mirror Hong Kong's existing monetary system, in which banknotes are issued by three financial institutions and backed by the central bank. CBDC is a direct responsibility of the central bank, while stablecoins are liabilities of the issuing bank, with collateral assets held by the central bank. The authors stated:
"Bringing CBDC-backed stablecoins to life has never been done before and so we felt this could complement the growing body of private sector stablecoin research. Indeed, what sets Aurum apart from stablecoins industry is that Aurum stablecoin balances are reconciled, compared to the issuing bank's real-time gross settlement (RTGS) balances with the central bank."
The high level of decoupling between wholesale and retail ledgers gives the system a high level of cyber-resilience, the designer said.
Join us at @HongKongFinTech 2022 on October 31st at 3:05pm HK time when the #BISInnovationHub team in Hong Kong will present the Aurum project, a prototype stack technology for retail #CBDC
The Hong Kong Monetary Authority and BIS Innovation Hub have cooperated on a unique CBDC design that reflects the realities of issuing currency in the special administrative region.
New
On October 21, the Hong Kong Monetary Authority unveiled its prototype digital currency from central retail bank Aurum (CBDC). The system, developed in conjunction with the Bank for International Settlements (BIS) Innovation Center, has a unique structure that mirrors the intricacies of the existing system for issuing money in Hong Kong.
Aurum consists of a wholesale interbank system and a retail electronic wallet. The electronic wallet is created in a local bank and has a smartphone interface. A validation system prevents bank overissue and double reimbursement by the user.
Intermediated retail CBDC is used in e-wallets, and CBDC-backed stablecoins are used in the interbank system. The unusual CBDC-backed stablecoins digitally mirror Hong Kong's existing monetary system, in which banknotes are issued by three financial institutions and backed by the central bank. CBDC is a direct responsibility of the central bank, while stablecoins are liabilities of the issuing bank, with collateral assets held by the central bank. The authors stated:
"Bringing CBDC-backed stablecoins to life has never been done before and so we felt this could complement the growing body of private sector stablecoin research. Indeed, what sets Aurum apart from stablecoins industry is that Aurum stablecoin balances are reconciled, compared to the issuing bank's real-time gross settlement (RTGS) balances with the central bank."
The high level of decoupling between wholesale and retail ledgers gives the system a high level of cyber-resilience, the designer said.
Join us at @HongKongFinTech 2022 on October 31st at 3:05pm HK time when the #BISInnovationHub team in Hong Kong will present the Aurum project, a prototype stack technology for retail #CBDC
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