The Banque de France & Hong Kong Monetary Authority foray into CBDC cross-border capabilities

By Gloria Mathias

The Banque de France (BDF) and the Hong Kong Monetary Authority (HKMA) have announced their collaboration regarding wholesale central bank digital currency (CBDC).

The BDF and the HKMA have been maintaining a close partnership to promote financial innovation. The latest collaboration is the HKMA’s participation in Wave 2 of the European Central Bank’s (ECB’s)  Eurosystem exploratory work, marking an important milestone as a major central banking institution outside the Eurosystem participating in the initiative.

The two central banking institutions recently agreed, indicating a step forward in bilateral cooperation to foster innovation in the wholesale CBDC and tokenization markets.

The two central banking institutions will study interoperability between their wholesale CBDC infrastructure, the BDF’s DL3S2 and the HKMA’s Project Ensemble Sandbox3, with a focus on real-time cross-border and cross-currency payments. The cross-border experiment aims to explore how to optimise the settlement efficiency of cross-border transactions and facilitate interoperability between financial market infrastructures in different jurisdictions.

Under the MoU, the BDF and the HKMA agree to strengthen communication and collaboration, as well as lay the foundations for further efforts on tokenization and new technologies.

Denis Beau, First Deputy Governor of the BDF, said, “As we have set the clear objective to improve cross-border payments, we have the opportunity brought by the Eurosystem exploratory work to collaborate with the HKMA on different use cases for payment versus payment between the tokenized form of the Hong Kong dollar and the Euro.”

Howard Lee, Deputy Chief Executive of the HKMA, said, “It is evident that there is a huge potential for collaboration between France and Hong Kong in various areas. Particularly in the FinTech sector, both the BDF and the HKMA have well proven themselves as pioneers in the field of CBDC. With the collaboration between BDF’s DL3S and the HKMA’s Project Ensemble Sandbox underway, we look forward to joining hands with the BDF to further explore different cross-border payment solutions and use cases to promote financial market connectivity and push forward the development of the global tokenisation market.”