- Project Sela, a CBDC venture, combines the flexibility of the private sector with central bank supervision.
- The introduction of “Access Enablers” promises increased competition and enhanced security.
In a groundbreaking collaboration, the Hong Kong Monetary Authority (HKMA), the Bank for International Settlements (BIS) Hong Kong Center and the Bank of Israel (BOI) have embarked on a groundbreaking journey to explore the potential of Central Bank Digital. Currencies (CBDC). Called ‘Project Sela’, this initiative aims to create an advanced CBDC ecosystem that seamlessly integrates privacy, security and decentralization.
Bridging the gap between the public and private sectors
Project Sela is currently investigating how responsibilities can be divided between the public and private sectors. In this innovative model, the central bank manages the ledger and user accounts, while private sector intermediaries handle customer interactions and ensure regulatory compliance. Insiders believe this approach can stimulate innovation, intensify competition and improve the quality of services.
The advent of access options
Legal analyzes have produced 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 relationships. The entire system is based on the central bank’s balance sheet and ensures that every transaction is free of credit risk. This streamlined arrangement could potentially increase the range of payment processors, boosting competition in the market.
Cybersecurity is at the heart of Project Sela
While Project Sela advocates greater accessibility, it also remains strongly committed to cybersecurity. This commitment aims to protect the integrity of the system. Building on Israel’s cybersecurity expertise and learning from Hong Kong’s initiatives, Project Sela seeks to strike a balance between widespread access and impeccable security.