Hong Kong and Israel Central Banks Collaborate on Retail CBDC Prototype

The Hong Kong Monetary Authority (HKMA) has joined forces with the Bank of Israel (BOI) and the Bank for International Settlements Innovation Hub (BISIH) Hong Kong Centre to release a joint report on “Project Sela – An accessible and secure retail CBDC ecosystem”. The report was unveiled at a conference in Tel Aviv on 12 September.

Project Sela marks the inaugural collaboration between the two central banks in the fintech domain. The initiative underscores the technical viability of a retail central bank digital currency (CBDC) framework that can foster competition and innovation in digital payments. This is achieved by permitting non-bank payment intermediaries to link directly to the CBDC ledger maintained by the central bank. The prototype, built on distributed ledger technology (DLT), serves as a testament to how the technical execution of the proposed structure can meet stringent cybersecurity, legal, and policy mandates.

Howard Lee, Deputy Chief Executive of the HKMA, commented on the project’s significance, stating, “Project Sela has offered invaluable hands-on insights into the cybersecurity, technical, and policy dimensions of retail CBDC deployment.” He further added that while the HKMA hasn’t finalized its stance on launching an e-HKD in Hong Kong, the findings from Project Sela will guide their continued research.

Andrew Abir, Deputy Governor of the BOI, emphasized the project’s role in fostering competition and innovation. He noted, “If central bank funds are to transition to a digital format, cybersecurity remains paramount. Project Sela has facilitated a comprehensive discussion on the cybersecurity facets of CBDC with our collaborators.”

Bénédicte Nolens, Head of the BIS Innovation Hub Hong Kong Centre, shed light on the project’s exploration into a CBDC system where the central bank manages the retail ledger. She highlighted the introduction of an “Access Enabler” intermediary, which broadens CBDC access, thereby stimulating competition and innovation, without compromising on cybersecurity or user privacy.

The Hong Kong Monetary Authority (HKMA) has been exploring Central Bank Digital Currency (CBDC) since 2017, leveraging Distributed Ledger Technologies (DLT). In 2017, the HKMA initiated Project LionRock, focusing on large-value payments.

By 2019, in collaboration with the Bank of Thailand, they launched Project Inthanon-LionRock, which evolved into the Multiple CBDC Bridge (mBridge) by 2021, emphasizing real-time cross-border transactions.

In Q3 2022, mBridge underwent a pilot phase, settling over HK$171 million in transactions. On the retail front, the HKMA is considering an e-HKD, with a technical whitepaper released in 2021 and a position paper in 2022 outlining its three-rail approach to implementation.

The Rail 2 – e-HKD pilot programme was launched in November 2022, inviting stakeholders to explore e-HKD applications.

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BIS Launches Project Icebreaker with Central Banks to Explore CBDC

The Bank for International Settlements (BIS) has rolled out Project Icebreaker together with the central banks of Sweden, Norway, and Israel to see how CBDCs can be utilized for international remittance and retail payments.

Per the announcement:

“Project Icebreaker is a collaboration between the Bank of Israel, Central Bank of Norway, Sveriges Riksbank and BIS Innovation Hub Nordic Centre to develop a “hub” to which participating central banks will connect their domestic proof-of-concept CBDC systems.”

Since cross-border payments are accustomed to insufficient transparency, limited access, low speeds, and high costs, Project Icebreaker seeks to explore how central bank digital currencies (CBDCs) can bridge the gap.

Ideally, it will scrutinize the technological feasibility and specific key functions of interjoining various domestic CBDC networks. 

The project’s final report is scheduled for the first quarter of 2023, given that it will run till the end of the year.

Andrew Abir, the Bank of Israel Deputy Governor, noted:

“The results of the project will be very important in guiding our future work on the digital shekel.”

He added:

“Efficient and accessible cross border payments are of extreme importance for a small and open economy like Israel and this was identified as one of the main motivations for a potential issuance of a digital shekel.” 

According to a survey by Ripple, CBDCs have triggered overwhelming consensus among global finance leaders.

The study disclosed that more than 70% of them were certain that CBDCs would spur financial inclusion, Blockchain.News reported. 

Once rolled out, CBDCs are expected to drive the financial inclusion of nearly 1.7 billion people left out of the banking system. This is because CBDCs are digital assets pegged to real-world assets and backed by the central banks.

In May, 90% of apex banks have shown intentions of rolling out Central Bank Digital Currencies (CBDCs), according to a study by the Bank for International Settlements (BIS). More than 110 countries are currently at one stage or another of the CBDC development process, and many more are poised to join the trend. 

-With assistance with Annie Li-


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At least 70% of Global Finance Leaders Believe CBDCs Will Spur Financial Inclusion – Ripple Study

Central bank digital currencies (CBDCs) have triggered overwhelming consensus among global finance leaders, according to a survey by Ripple, a leader in enterprise crypto and blockchain solutions.


The study called “New Value Report” interviewed 1,600 worldwide finance leaders and found a heavy inclination towards CBDCs. Ripple stated:

“More than 70% of respondents surveyed across five global regions believe CBDCs stand to deliver major social change within the next five years, with the Asia Pacific ranking the highest at 89%.”

Most finance leaders acknowledged that CBDCs would be a stepping stone toward more financial inclusion. The report highlighted:

“Four out of five regions see financial inclusion or greater access to credit as the largest potential breakthrough to be driven by CBDCs.”

Once rolled out, CBDCs are expected to drive the financial inclusion of nearly 1.7 billion people left out of the banking system, given that they are pegged to a real-world asset and backed by central banks.


Ripple acknowledged that CBDCs were gaining traction based on the benefits accrued. For instance, their digital nature can enhance underserved communities’ accessibility to loans and other financial services. 


The study stated:

“Consensus on the potential for CBDCs to bring about more inclusive financial systems is clear. While much work remains to be done, many expect the transformation to be timely and that we will begin to see the fruits of this transition before the turn of the decade.”

On the other hand, the survey highlighted that some hurdles to implementation included security protections, privacy, offline access, identity verification, and consumer education. 


Meanwhile, Bank Indonesia recently conducted a CBDC feasibility study by offering a white paper concerning establishing the digital Rupiah. 

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9 in 10 Central Banks are Eyeing CBDCs, BIS Study Shows

90% of apex banks have shown intentions of rolling out Central Bank Digital Currencies (CBDCs), according to a study by the Bank for International Settlements (BIS).

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Per the report:

“Nine out of 10 central banks are exploring central bank digital currencies, and more than half are now developing them or running concrete experiments.”

The study surveyed 81 central banks about their engagement in CBDCs as well as their intentions and motivations about CBDC issuance. China has already set the ball rolling with its digital yuan


The BIS found that the emergence of cryptocurrencies like stablecoins and the Covid-19 pandemic have accelerated the CBDC drive, especially in advanced economies. Additionally, retail CBDCs have gained more momentum because they are moving to advanced stages. The survey noted:

“Globally, more than two thirds of central banks consider that they are likely to or might possibly issue a retail CBDC in either the short or medium term.”

On the other hand, wholesale CBDCs are being fronted because they are stepping stones toward cross-border payment efficiency. 


The BIS had previously noted that wholesale CBDCs would face challenges like differences in jurisdictional boundaries and governance provisions amongst countries. Therefore, it was willing to help countries handle these differences while fostering the development of technical capabilities and testing at a large scale level. 


Per the study:

“Central banks consider CBDCs as capable of alleviating key pain points such as the limited operating hours of current payment systems and the length of current transaction chains.”

Once rolled out, CBDCs are expected to drive the financial inclusion of nearly 1.7 billion people left out of the banking system. 


This is because CBDCs are digital assets pegged to a real-world asset and backed by the central banks meaning that they represent a claim against the bank exactly the way banknotes work. Central banks will also be in full control of the supply, one of the major features that have drawn criticism across the board.

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Visa Creates Service To Advise Financial Institutions On Cryptocurrencies

It’s a new dawn. Credit card giant Visa is now in the cryptocurrency business. They won’t be buying and selling yet, though. Its new division will advise everyone. From retail customers to financial institutions, even central banks can get information from Visa’s crypto experts. A lot of people still value the input traditional institutions can give, even if they don’t have the track record. So this seems to be good news for the crypto industry.

Related Reading | As Amazon Takes on Visa, Does Cryptocurrency Offer the Real Alternative?

Reuters informs:

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“Visa’s services include educating institutions about cryptocurrencies, allowing clients to use the payment processor’s network for digital offerings, and helping manage backend operations.”

And Visa promises:

“Tap crypto’s potential with a pioneer in global payments. For crypto to realize its full potential, we are connecting crypto and blockchain networks to our trusted, global payment network. And we’re propelling innovation to deliver even more access and value to the crypto ecosystem.”

Visa’s CFO Still Doesn’t Understand Bitcoin

In a bizarre move, considering they’re offering expert advice in cryptocurrencies, Visa’s CFO said the darndest thing. Vasant Prabhu told Reuters:

“If the price is going to fluctuate from $60,000 to $50,000 in a few hours, it’s a very difficult thing for a merchant to accept (bitcoin) as a currency. I don’t know if cryptocurrencies like bitcoin will ever be a medium of exchange. Stablecoins will.”

Bitcoin is already a medium of exchange. It’s legal tender in an entire country. It’s a process, but merchants will quickly learn the benefits of holding a deflationary currency instead of an inflationary one. If Prabhu doesn’t understand this, how does he expect his clients to take his advice seriously? 

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BTCUSD price chart for 12/09/2021 - TradingView

BTC price chart for 12/09/2021 on Gemini | Source: BTC/USD on TradingView.com

What Did Visa’s Crypto Research Department Found Out?

As an introduction to the company’s crypto research department, the company says, “For financial institutions eager to attract or retain customers with a crypto offering, retailers looking to delve into NFTs, or central banks exploring digital currencies, understanding the crypto ecosystem is a vital first step.”

As the first show of power, they produced “The Crypto Phenomenon: Consumer Attitudes & Usage.” A report that, among other things, found out the following:

  • “Almost universal awareness of cryptocurrency at 94% globally among adults with discretion over their household finances.”
  • “Nearly one in three crypto-aware consumers already own or use cryptocurrency, with the majority saying that their use has increased in the past year (62% Owners), and two-thirds expecting that they will increase the share of their investable assets invested in crypto in the next 12 months (66% Owners).”
  • “In Emerging Markets, ownership (37%) and curiosity about (27%) cryptocurrency is even more pronounced.”
  • “The biggest drivers of owning and using cryptocurrency are to take part in the “financial way of the future” (42% Owners) and to build wealth (41% Owners)”
  • “Most crypto owners would be interested in buying cryptocurrency from their bank (85% Owners)”
  • “More than a third of current owners indicate that they plan to switch to a bank that offers crypto products within the next 12 months (39% Owners).”
  • “The significant majority of consumers who use cryptocurrency express interest in crypto-linked cards (83% Active Owners) and rewards (86% Active Owners).”

Related Reading | Visa Is Building A Payment Channel Network On Ethereum

Conclusions To Avoid Confusion

Even though Visa’s study seems to be skewed to what its clients need to hear to acquire their new service, the results are interesting. It’s useful to see what the research department of a company with that kind of resources can come up with. Let’s hope they keep it coming. And let’s hope Visa’s CTO reads “The Bitcoin Standard,” because that quote was embarrassing.

Featured Image: Visa and Bitcoin, taken from their site | Charts by TradingView


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