Joerg Hiller Oct 28, 2024 15:40
The Hong Kong Monetary Authority and Banco Central do Brasil are collaborating on cross-border tokenization projects, focusing on CBDC infrastructures and financial market innovation.
Hong Kong and Brazil Pave the Way for Cross-Border Tokenization
The Hong Kong Monetary Authority (HKMA) has announced a significant partnership with Banco Central do Brasil (BCB) to explore cross-border tokenization initiatives. This collaboration aims to leverage central bank digital currency (CBDC) infrastructures, integrating the Ensemble Sandbox and Drex pilot platform for innovative financial solutions, according to Hong Kong Monetary Authority.
Exploring Payment and Settlement Use Cases
The primary focus of this joint venture is to investigate payment-versus-payment (PvP) and delivery-versus-payment (DvP) settlement use cases. These include applications in trade finance and carbon credits, highlighting the potential of tokenized assets in global markets. The HKMA’s Ensemble Sandbox, launched in August, will facilitate these experiments alongside the BCB’s Drex pilot programme.
Building on a Foundation of Cooperation
This partnership builds on a Co-operation Agreement signed by the HKMA and BCB in 2018, fostering innovation in financial services across both markets. The HKMA has been actively engaging with industry participants in four key areas: fixed income and investment funds, liquidity management, green and sustainable finance, and trade and supply chain finance.
Progress in Brazil’s Financial Market
In Brazil, the Drex pilot programme is advancing with 13 themes announced for its second phase. With Drex as its foundation, the initiative aims to support the development of a tokenized financial market, involving over 70 companies. This diverse collaboration showcases Brazil’s commitment to financial innovation.
Leadership Perspectives
Mr. Eddie Yue, Chief Executive of the HKMA, emphasized the collaborative spirit of Project Ensemble, noting that both institutions share a vision of advancing the financial industry through technology. Mr. Roberto Campos Neto, Governor of the Banco Central do Brasil, highlighted the symbolic nature of this cross-border collaboration, viewing it as crucial for creating a more integrated global financial market.
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