Hong Kong Unveils Digital Currency Prototype: Project Aurum
Project Aurum, Hong Kong's digital currency, has been unveiled as a two-tier platform with wholesale interbank and retail e-wallets.
Based on Hong Kong's existing system of issuing money, Project Aurum is a collaboration between the Hong Kong Monetary Authority, the BIS Innovation Hub, and ASTRI.
An Aurum digital currency system consists of a wholesale interbank system as well as a retail e-wallet system. This central bank digital currency (CBDC) system introduces two very different types of tokens: intermediated CBDC and stablecoins backed by CBDC. A CBDC-backed stablecoin is used in the interbank system, while intermediated retail CBDC is used in e-wallets.
According to the BIS report, “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."
CBDC-backed stablecoins, according to their developers, can be used by monetary authorities to decide how private sector stablecoins should be regulated.
The Hong Kong monetary authority will pursue retail and wholesale CBDC implementation separately as part of its comprehensive Fintech 2025 Strategy. Retail CBDCs don't have an "imminent role" to play in payments, nevertheless, there may be a quick rise in use cases.
The Hong Kong government has begun to explore the possibility of issuing its own CBDC in March 2021 as part of its efforts to catch up with the world in terms of CBDC development. Mainland China has already been working steadily to expand its digital yuan (e-CNY) pilot program.
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