Hong Kong and Thailand Collaborate on Cross-Border Tokenisation Initiatives

The Hong Kong Monetary Authority (HKMA) has announced a significant collaboration with the Bank of Thailand (BOT) aimed at exploring cross-border tokenisation use cases. This partnership is part of Project Ensemble and Project San, according to the Hong Kong Monetary Authority.

Background and Evolution

The fintech collaboration between HKMA and BOT began in 2019 with the signing of a Memorandum of Understanding (MoU) to foster financial innovation in both jurisdictions. This collaboration has previously led to successful projects such as Project Inthanon-LionRock and Project mBridge, which have paved the way for further advancements in cross-border fintech initiatives.

Focus on Tokenisation Use Cases

Building on their previous successes, the two central banks will now explore Payment versus Payment (PvP) and Delivery versus Payment (DvP) tokenisation use cases. These will include areas such as trade payments and carbon credits. A crucial component of this collaboration is the development of a proof of concept to examine the interoperability of distributed ledger technology integrated financial market infrastructures (DLT FMIs). This initiative will involve testing a link between DLT FMIs under Project Ensemble and BOT’s Project San.

Ensemble Sandbox and Project San

The Ensemble Sandbox, launched in August 2024, is a platform for industry participants to conduct tokenisation experiments across fixed income, investment funds, liquidity management, green and sustainable finance, and trade and supply chain finance. Meanwhile, BOT’s Project San, initiated in June 2024, aims to build and test a prototype for a tokenisation ecosystem that includes a wholesale settlement engine and EVM-compatible ledgers supporting tokenised private money and assets.

Statements from Key Figures

Mr. Howard Lee, Deputy Chief Executive of the HKMA, expressed optimism about the potential of cross-border applications using central bank digital currency, emphasizing that the partnership will yield valuable insights for both jurisdictions. Similarly, Mrs. Alisara Mahasandana, Deputy Governor of Corporate Development at the Bank of Thailand, highlighted the mutual benefits for Hong Kong and Thailand through the exploration of tokenisation interoperability, which considers different technical designs, business requirements, and regulatory frameworks.