- Project Sela, a CBDC venture, combines the agility of the private sector with central bank oversight.
- The introduction of “Access Enablers” has increased competition and increased security.
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 pioneering journey to explore the potential of central bank digital through cutting-edge collaboration. Currency (CBDC). Dubbed “Project Sela,” the initiative aims to create an advanced CBDC ecosystem that seamlessly integrates privacy, security, and decentralization.
Bridging the gap between public and private sectors
Project Sela is currently investigating ways to distribute responsibilities between the public and private sectors. In this innovative model, the central bank manages the ledger and user accounts, while private sector intermediaries are responsible for customer interactions and ensure regulatory compliance. Insiders believe this approach can foster innovation, increase competition, and improve service quality.
The advent of Access Enablers
The legal analysis gave rise to a promising aspect within Project Sela’s architecture: the introduction of “Access Enablers” (AEs). Instead of managing or holding the digital currency itself, these specialized companies will focus solely on customer relationships. The entire system is based on the central bank’s balance sheet, ensuring that each transaction is free of credit risk. This streamlined arrangement could potentially broaden the scope of payment processors and promote market competition.
Cybersecurity is at the heart of Project Sela
Project Sela pursues greater accessibility while also maintaining a strong commitment to cybersecurity. This commitment aims to protect the integrity of the system. Leveraging Israel’s expertise in cybersecurity and learnings from initiatives in Hong Kong, Project Sela seeks to strike a balance between complete security and broad access.