The Bank for International Settlements (BIS) Innovation Hub, the Bank of Israel (BoI), and the Hong Kong Monetary Authority (HKMA) have released a comprehensive report detailing the outcomes of their joint central bank digital currency (CBDC) experiment, known as Project Sela.
The report highlighted the success of Project Sela in achieving its objectives, which focused on expanding the availability of a retail Central Bank Digital Currency (CBDC) to consumers by including non-bank payment intermediaries.
The institutions built a proof-of-concept prototype architecture using blockchain technology that could enable direct connections between non-bank payment intermediaries and the CBDC ledger of a central bank.
They also demonstrated how this payment architecture could effectively integrate rigorous cybersecurity measures, legal compliance, and policy requirements.
Bénédicte Nolens, Head of the BIS Innovation Hub Hong Kong Centre, explained the project’s significance, saying:
“Project Sela explored the feasibility of a CBDC system where the central bank operates the retail ledger and a new type of intermediary, called an Access Enabler, provides broader access to the CBDC, promoting competition and innovation. It showed that this can be achieved without compromising cyber security or the privacy of end users from the central bank.“
While neither the Bank of Israel nor the Hong Kong Monetary Authority has issued a CBDC to date, they acknowledged that the project’s findings would guide their future steps in the matter.
“The project proved the feasibility of the model we had in mind,”
Andrew Abir, Deputy Governor of the Bank of Israel, said in a statement.
Howard Lee, Deputy Chief Executive of the HKMA, expressed confidence that other central banks would also benefit from the project’s results in their respective evaluation process,
The Bank for International Settlements had previously reported that 93% of central banks worldwide were exploring the potential issuing of central bank digital currencies (CBDCs). This highlights the global significance of projects like Project Sela in advancing CBDC development and adoption.
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