Hong Kong Launches Sandbox for Project Ensemble

Hong Kong has launched a sandbox for Project Ensemble, a wholesale central bank digital currency (CBDC) project, advancing its efforts to test tokenization within the traditional financial sector.

Wholesale CBDCs are intended primarily for financial institutions, contrasting with retail CBDCs, which are designed for everyday transactions. Wholesale CBDCs facilitate interbank settlements and large-value payments.

The Hong Kong Monetary Authority (HKMA), the de facto central bank, announced the sandbox on Wednesday. It will initially focus on four areas: fixed income and investment funds, liquidity management, green and sustainable finance, and trade and supply chain finance.

The HKMA stated that the sandbox aims to enable interbank settlement using experimental tokenized money. Major participants include Bank of China, HSBC, Hang Seng Bank, Standard Chartered Bank, Ant Digital, HashKey, and Microsoft. Several asset managers, such as BlackRock and Franklin Templeton, are also set to join the Project Ensemble sandbox.

This launch follows the establishment of Project Ensemble in March, part of the second phase of the e-HKD pilot. The project studies the programmability, tokenization, and atomic settlement related to CBDCs. The HKMA began researching CBDCs in 2017, with increased focus on e-HKD since 2021.

Eddie Yue, CEO of the HKMA, remarked that the strong industry interest in innovative digital finance solutions has been encouraging. The sandbox’s introduction represents a significant step towards exploring tokenization applications in real-life business scenarios.

Ant Digital Technologies, Ant Group’s blockchain arm, aims to enhance financing efficiency. For instance, Longshine Technology has digitized over 9,000 charging piles as “real world assets” (RWAs) and secured cross-border financing for these assets in Hong Kong.

HashKey Group, a Hong Kong digital asset firm, will also test tokenization and trading of RWAs, including carbon credits and green assets, according to its statement.