Hong Kong Monetary Authority collaborates with Banque de France to explore cross-border central bank digital currency cooperation

On June 27, the Hong Kong Monetary Authority (HKMA) and the Banque de France (French Central Bank) announced a collaboration on wholesale central bank digital currency (wCBDC) to promote cross-border payments and tokenized market innovation. This partnership signifies a significant step for the two countries' financial institutions in the field of financial technology.

Long-Term Collaboration to Advance Financial Innovation

The Hong Kong Monetary Authority (HKMA) and the Bank of France have maintained close cooperation to promote financial innovation. The HKMA recently participated in the second phase of the Eurosystem exploration work, becoming one of the major central bank institutions outside the euro area to participate in the project. The two parties signed a memorandum of understanding to further strengthen the foundation of bilateral cooperation and jointly promote the development of wCBDC and tokenized markets.

In-Depth Study on Cross-Border Payment Interoperability

One important aspect of the collaboration is to study the interoperability between HKMA's Ensemble project sandbox and the Bank of France's DL3S platform, particularly in real-time cross-border and cross-currency payments. This cross-border experiment aims to explore how to enhance the efficiency of cross-border transaction settlements and promote interoperability of financial market infrastructures across different regions.

The HKMA is promoting the development of tokenized markets and has established a dedicated task force.

Enhanced Communication and Collaboration Between Parties

According to the memorandum of understanding, the HKMA and the Bank of France have agreed to enhance communication and collaboration to lay the foundation for further applications of tokenization and new technologies. Denis Beau, First Deputy Governor of the Bank of France, stated that they have set clear objectives for improving cross-border payments and hope to explore different use cases for using tokenized Hong Kong dollars and euros for simultaneous foreign exchange transactions settlement through cooperation with the HKMA.

Looking Ahead to Future Cooperation

Eddie Yue, Deputy Chief Executive of the HKMA, stated that France and Hong Kong have enormous cooperation potential in various areas, especially in the field of financial technology. The HKMA's Ensemble project, announced earlier this year, is dedicated to innovating financial market infrastructure and achieving interbank settlement of tokenized currencies through wCBDC. With the cooperation between the Bank of France's DL3S platform and the HKMA's Ensemble project sandbox, the two parties will further explore different cross-border payment solutions and use cases to promote market interoperability and drive the development of the global tokenized market.