ConsenSys wins tender to develop proof of concept for CBDC digital currency and cross-border payments infrastructure between two of the world's largest economies.
Ethereum-based blockchain software technology company, ConsenSys, will be the main executor of the contract of the Hong Kong Monetary Authority (HKMA), which seeks to develop its own digital currency (CBDC) and a proof of concept (PoC) for cross-border payments on an interbank blockchain platform connecting Hong Kong to Thailand. ConsenSys will start the second phase of this project in conjunction with PwC, a multinational professional services and business company, and Forms HK, a FinTech that provides cross-border financial services for institutions and visionaries.
Together with these companies, Consensys will develop the plan being executed by HKMA and the Bank of Thailand (BOT) to design a digital currency and study in depth the possible scenarios for its use and implementation, and the advantages and benefits it offers within the financial and economic system. The plan, called Inthanon-LionRock, was born in 2019 within the Hong Kong regulatory authority, and owes its name to Thailand's CBDC proposal, Inthanon, and the Hong Kong CBDC proposal, LionRock.
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ConsenSys' experience and track record
ConsenSys is at the forefront of technology development and has extensive experience in designing decentralized payment and trading networks with several of the world's leading central banks and financial institutions, including the South African Reserve Bank and the Monetary Authority of Singapore. The company is focused on driving the use of new technologies, which have the potential to enable the digitalization of systems and ensure greater connectivity in financial markets globally.
ConsenSys' main objective within the Inthanon-LionRock CBDC project is to ensure a scalable, secure, reliable and interoperable solution that enables cross-border payments between the two Asian regions. In this regard, ConsenSys Director in Hong Kong, Charles d'Haussy, said the company is proud to have been chosen by the regulatory authority to develop the study project for this cross-border payment network.
“ConsenSys is delighted to lead this CBDC implementation for cross-border payments. We are honoured to work on developing Hong Kong’s financial infrastructure.”
To Joseph Lubin, founder of ConsenSys, CBDC digital currencies have the potential to allow central banks to have the necessary tools to implement a future-oriented monetary policy, so that entities stay at the forefront of the new digital era and new technological changes. For the founder of the company, and also co-founder of EthereumCBDCs present unique advantages, facilitating financial access to millions of users in retail and wholesale markets, as well as having the potential to foster the development of a much more efficient financial infrastructure for interbank settlements.
Blockchain and DLT
In developing their new digital infrastructure, the Hong Kong Monetary Authority (HKMA) and the Bank of Thailand are discussing the use of technology blockchain and distributed ledger technology (DLT). However, according to the results of the first phase of the Inthanon-LionRock study, the authorities are leaning towards the development of DLT technology, which has great potential to reduce the problems present in the cross-border payment and transfer mechanisms that are currently implemented.
For its part, ConsenSys believes that blockchain technology, and in particular the Ethereum blockchain, meets all the requirements to adequately support a CBDC and guarantee all the demands in terms of scalability and privacy.
Inthanon-LionRock was launched in 2019 to study the application of a CBDC in cross-border payments. During the first phase, the outcome of which was published in January 2020, the HKMA and the BOT developed a prototype cross-border network called THB-HKD, which enabled the 10 participating banks in Hong Kong and Thailand to conduct peer-to-peer transfers of funds and foreign exchange. During this study, the two entities tested the potential benefits of digital currencies in reducing layers of settlement and intermediaries, and simplifying the cross-border transfer process.
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