HKMA publishes joint report on Project Sela

On September 12, 2023, the Hong Kong Monetary Authority (HKMA), in collaboration with the Bank of Israel and the Bank for International Settlements Innovation Hub (BISIH), released a joint report concerning Project Sela, a joint initiative by aforementioned entities to explore the (technical) feasibility of a retail Central Bank Digital Currency (rCBDC) system that encourages both competition and innovation in digital payments by allowing non-bank payment intermediaries called access enablers (AEs) to directly connect to the CBDC ledger of a central bank using distributed ledger technology (DLT).
Specifically, AEs would provide customer-facing rCBDC services without taking control of customers‘ rCBDC funds. Users would thereby generate their own cryptographic key pair during the onboarding process, ensuring end-to-end verification of signatures between users, AEs, and the central bank as the platform operator. The design incorporates programmability to enable a wide range of potential use cases, but limits direct execution on the rCBDC ledger to mitigate cyber threats, relying on the coordination of application logic executed at the AEs.
The report now outlines the key objectives and pillars of Project Sela, such as policy, legal, cyber security, and technology considerations, and how these elements are being addressed in the development and design of such rCBDC platform. The report further presents an overview of the technical architecture, including details about ecosystem participants, components, and use case flows.