On 28 October 2024, the Hong Kong Monetary Authority (HKMA) announced a pioneering collaboration with the Banco Central do Brasil (BCB) to drive innovation in cross-border tokenisation. This partnership aims to bridge the digital financial infrastructures of Hong Kong and Brazil, uniting their respective central bank digital currency (CBDC) platforms, Project Ensemble’s Sandbox and Brazil’s Drex pilot programme. By jointly exploring cross-border use cases for tokenisation, the HKMA and BCB are set to establish new standards in digital finance, particularly in areas such as trade finance and carbon credit settlement.
The partnership builds on a Co-operation Agreement signed between HKMA and BCB in 2018, which laid the groundwork for fostering innovation in financial services across both jurisdictions. Now, as both institutions make significant strides in the development of CBDCs and tokenised assets, they see the collaboration as an opportunity to create a more integrated, secure, and efficient global financial system. By linking the Ensemble Sandbox and the Drex platform, the HKMA and BCB aim to create seamless and secure channels for cross-border payment-versus-payment (PvP) and delivery-versus-payment (DvP) settlements.
This collaboration reflects a shared commitment to harnessing advanced technology to elevate the financial industry. The Chief Executive of HKMA, Mr Eddie Yue, remarked, “The seed of collaboration between HKMA and BCB, planted a few years ago, has now blossomed. 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.”
The integration of the Ensemble Sandbox and Drex platform is a advancement in enabling efficient cross-border transactions between Hong Kong and Brazil. The cross-border payment infrastructure is expected to provide mutual benefits, enhancing efficiency and reducing risks associated with international transactions. Both jurisdictions will benefit from improved capabilities for trade finance and carbon credit settlements, helping businesses and financial institutions alike to operate with increased trust and transparency. By enabling tokenised transactions in carbon credits, the project aims to support environmental sustainability efforts while establishing a reliable market structure for carbon credit trading.
The HKMA’s Ensemble Sandbox, launched in August 2024, serves as a versatile environment for testing digital financial technologies across four core areas: fixed income and investment funds, liquidity management, green and sustainable finance, and trade and supply chain finance. This platform provides industry participants with a structured environment to explore and validate tokenisation models and other digital financial services.
Meanwhile, the Drex platform in Brazil represents the BCB’s ambitious efforts to establish a tokenised financial ecosystem within its jurisdiction. In September 2024, BCB announced the second phase of its Drex pilot programme, which covers thirteen themes focused on developing a secure and scalable tokenised financial market. Developed in cooperation with over seventy Brazilian financial institutions, Drex’s framework supports a wide range of applications that promise to enrich Brazil’s financial landscape.
This strategic alignment between Ensemble and Drex opens up new avenues for industry-wide experimentation and development, where the combined insights from both jurisdictions can lead to innovative solutions for emerging financial challenges. Governor Roberto Campos Neto of the BCB expressed his enthusiasm for the project, stating, “The collaboration with the HKMA is an important step of this new phase in the construction of Drex. Participating in cross-border experimentation and debates is fundamental to help in the creation of an even better integrated global financial market.”
Through this partnership, HKMA and BCB are establishing a model for international regulatory collaboration, setting a precedent for future cross-border digital finance initiatives. The collaboration is symbolic of the potential for global integration, as both authorities recognise that the path to a resilient financial future lies in international cooperation and knowledge-sharing.
Through Project Ensemble and the Drex programme, HKMA and BCB are laying the groundwork for a future where cross-border transactions are more secure, transparent, and efficient, with mutual goals to refine CBDC applications, expand tokenised asset classes, and support sustainable finance.
(Source: https://www.hkma.gov.hk/eng/news-and-media/press-releases/2024/10/20241028-3/)
