Blockchain development firm Consensys has been awarded a contract to develop a proof-of-concept Central Bank Digital Currency that will be used between Hong Kong and Thailand.
According to the official release from Consensys, the Hong Kong Monetary Authority (HKMA) awarded the blockchain development firm the contract to carry out the second implementation phase in conjunction with PricewaterhouseCoopers Limited and Forms HK.
Consensys’ work forms part of an ongoing project between the HKMA and the Bank of Thailand (BoT) named Project Inthanon-LionRock, which aims to explore the various possibilities of using a CBDC for cross-border payments between the two institutions.
The project was officially launched in September 2019 and has involved a number of banks and financial institutions in both countries as well as the Thailand and Hong Kong Central Banks which are responsible for leading the project.
Blockchain technology is the central focus point of the project, as the various institutions involved look to leverage the technology to increase efficiency in cross-border transactions.
The project hopes to use blockchain to reduce inefficiencies and high costs associated with these transactions as well as improve traceability and regulatory compliance. This will also help carry out realtime cross-border fund transfers and atomic Payment-versus-Payment (PvP) foreign exchange transactions.
Interestingly enough, this collaborative effort stems from the individual exploration of CBDCs by the HKMA and BoT. The former started Project LionRock in 2017 with the help of local Hong Kong financial institutions, while the BoT started Project Inthanon in 2018 which saw a number of local banks collaborate to explore blockchain technology and its potential to improve financial processes in the country.
Following the individual projects, the two institutions decided to team up and merge the projects to explore the use of a CBDC to vastly improve cross-border payments between the two countries.
Consensys’ experience key
With the ground work and research having been established and carried out by the HKMA and BoT, Consensys will be tasked with building the infrastructure for the pilot CBDC project.
The firm has had some in depth experience on this front having developed and delivered decentralized payment networks to the Monetary Authority of Singapore as well as the South African Reserve Bank.
According to its statement earlier this week, Consensys will use its Enterprise Ethereum stack known as Quorum to deliver solutions that optimize scalability, security and interoperability between its network participants.