Hong Kong Reveal Digital Currency CBDC Prototype Called Aurum.
A prototype of Hong Kong’s own digital currency, known as Project Aurum, has been unveiled by the financial authorities of the Chinese autonomous territory. Participants revealed that the two-tier platform consists of a wholesale interbank system and a retail e-wallet system.
An Overview of Project Aurum
According to the announcement by the Bank for International Settlements (BIS), this project is a collaboration with the Hong Kong Monetary Authority (HKMA) and the Hong Kong Applied Science and Technology Research Institute has produced a prototype of Hong Kong’s upcoming digital currency.
In a press release issued this week, the international financial institution explained that project Aurum is a full-stack, front-end and back-end central bank digital currency system.
Hong Kong is putting more effort into CBDC development in an effort to catch up with other countries, including mainland China, which is expanding its digital yuan program (e-CNY).
In March 2021, the Chinese special administrative region began exploring the possibility of issuing its own CBDC.
Project Aurum to Launch Two Different Digital Tokens
Aurum participants plan to launch two different kinds of digital tokens. These will include the first, a digital currency that will be intermediated, and the second, a stablecoin backed by the CBDC, which will be circulated among banks.
The BIS said, “The latter is unique in the study of CBDC to date. Privacy, safety and flexibility are core to the system.”
“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,” said the project’s author.
A further explanation is that Aurum’s stablecoin balances are reconciled as opposed to real-time gross settlement balances with the central bank of the issuing bank like private stablecoins.
A CBDC-backed stablecoin system may be useful for monetary authorities to use when considering regulatory approaches to private sector stablecoins, according to the developers, “especially while seeking to design methods to verify the backing of the stablecoins, a highly topical matter.”
A state-backed digital coin will be issued by three Hong Kong financial institutions, just as it is with its fiat currency.