The HKMA partners with Brazil and Thailand’s central banks to advance cross-border tokenization and CBDC use while enhancing financial innovation and security.
By Temitope Olatunji
Edited by Julia Sakovich
Updated
3 mins read
The Hong Kong Monetary Authority (HKMA) has teamed up with the Banco Central do Brasil (BCB) and the Bank of Thailand (BOT) to advance cross-border tokenization. The HKMA revealed this in two separate releases.
The agency and the Banco Central do Brasil will connect their experimental central bank digital currency (CBDC) infrastructures, Ensemble Sandbox, and the Drex pilot platform to test cross-border settlement use cases like trade finance and carbon credits.
The Hong Kong financial watchdog launched its Ensemble Sandbox in August to experiment with industry participants in four key areas: fixed income and investment funds, liquidity management, green and sustainable finance, and trade and supply chain finance.
This announcement traces back to an agreement signed in 2018 between the HKMA and the BCB, in which the two institutions pledged to foster innovation in financial services across their respective markets. In September, Banco Central do Brasil introduced the second phase of its Drex pilot, working with over 70 companies to develop a tokenized financial market in Brazil.
HKMA Chief Executive Mr. Eddie Yue stated that the collaboration between the HKMA and the BCB initiated a few years ago, has now shown promising results. He noted that Ensemble works closely with industry partners to advance the tokenization market and praised the BCB as an excellent partner sharing a similar vision for the future of the financial industry. Mr. Yue stated:
“Project Ensemble is all about collaboration with industry partners to advance the tokenisation market. In this regard, the BCB is an excellent partner, especially as we share a common vision of driving the future of the financial industry through technology. We are both taking concrete steps to turn this vision into reality.”
Roberto Campos Neto, Governor of Banco Central do Brasil, stressed the importance of the partnership in the new phase of Drex’s construction. He noted that cross-border experimentation is crucial to creating a well-integrated global financial market.
Furthermore, the HKMA and the BOT started a partnership in 2019, with the two institutions signing a Memorandum of Understanding (MoU). This partnership, similar to the one with the BCB, focuses on developing tokenized settlement methods to enhance security and efficiency in essential financial operations.
HKMA Deputy Chief Executive Mr. Howard Lee mentioned that the HKMA and the BOT shared similar goals in exploring the use of central bank digital currency (CBDC) for cross-border transactions. He expressed confidence that the project would yield valuable insights for both jurisdictions.
“The HKMA and the BOT share the same vision for the potential of cross-border applications using central bank digital currency. Expanding our partnership to explore cross-border tokenisation use cases further underscores this shared vision. Same as our previous projects, I am confident that this collaboration will yield valuable insights for both jurisdictions,” he stated.
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Temitope is a writer with more than four years of experience writing across various niches. He has a special interest in the fintech and blockchain spaces and enjoy writing articles in those areas. He holds bachelor's and master's degrees in linguistics. When not writing, he trades forex and plays video games.
