- Project Sela, a CBDC venture, combines private sector agility with central bank oversight.
- The introduction of “Access Enablers” promises heightened competition and reinforced security.
In a cutting-edge collaboration, the Hong Kong Monetary Authority (HKMA), the Bank for International Settlements (BIS) Hong Kong Centre, and the Bank of Israel (BOI) have embarked on a pioneering journey to explore the potential of Central Bank Digital Currencies (CBDC). Dubbed “Project Sela,” this initiative aims to craft an advanced CBDC ecosystem that seamlessly integrates privacy, security, and decentralization.
Bridging the Gap Between Public and Private Sectors
Project Sela currently examines how to divide responsibilities between the public and private sectors. In this innovative model, the central bank manages the ledger and user accounts, while private sector intermediaries take charge of customer interactions and ensure regulatory compliance. Insiders believe this approach can fuel innovation, intensify competition, and improve service quality.
The Advent of Access Enablers
Legal analyses have birthed a promising facet within Project Sela’s architecture: the introduction of “Access Enablers” (AEs). Rather than managing or holding the digital currency themselves, these specialized entities will focus solely on customer relations. The entire system finds its foundation in the central bank’s balance sheet, ensuring that each transaction is devoid of credit risk. This streamlined arrangement can potentially widen the gamut of payment processors, spurring competition in the market.
Cybersecurity is at the Heart of Project Sela
While Project Sela champions greater accessibility, it also maintains a strong commitment to cybersecurity. This dedication aims to protect the system’s integrity. Drawing on Israel’s expertise in cybersecurity and learning from Hong Kong’s initiatives, Project Sela seeks to balance widespread access with impeccable security.