Project Sela: Research with Bank of Israel on cybersecurity issues in context of retail CBDC

The following is issued on behalf of the Hong Kong Monetary Authority:
     The Hong Kong Monetary Authority (HKMA), together with the Bank of Israel (BOI) and the Bank for International Settlements Innovation Hub (BISIH) Hong Kong Centre, today (June 17) announced a joint research on retail central bank digital currency (CBDC).

     Led by the BISIH Hong Kong Centre and building on the foundation laid by Project Aurum (Note 2), Project Sela (Note 1) will take a deep dive into cybersecurity issues in the context of retail CBDC. In particular, it will study the data security implications of a two-tier retail CBDC architecture where the intermediaries will have no financial exposure, and pioneer methods of rendering it more resilient to cyber attacks. The project is expected to be completed by the end of 2022.

     Deputy Chief Executive of the HKMA, Mr Howard Lee, said, "We are pleased to team up with the BOI and the BISIH Hong Kong Centre to conduct Project Sela. Not only is the tripartite project a significant milestone in the HKMA's CBDC journey, it also marks the first collaboration between Hong Kong and Israel on the fintech front. We trust that with the expertise offered by Israel, a global leader in cybersecurity, the findings of the joint project would add to the wealth of knowledge on CBDC and contribute to the common good of the international central banking community."

     Deputy Governor of the BOI, Andrew Abir, said, "Providing an efficient payment system that will increase competition in the payment market is one of the primary motivations we've identified for a possible issuance of a digital shekel – an Israeli CBDC. We are delighted for the opportunity to test this model together with excellent and experienced partners such as the BIS Innovation Hub and the Hong Kong Monetary Authority. Accessing Israel's well known experience in cybersecurity is a great opportunity to support the global research of CBDCs."

Note 1: "Sela" was an ancient Hebrew silver coin and is the Hebrew word for "Rock" thus making a reference to Hong Kong's Lion Rock mountain, which gave the name to the HKMA's first CBDC study, "Project LionRock"; and thus to the collaboration between the BOI and the HKMA.

Note 2: Project Aurum, conducted by the HKMA and BISIH Hong Kong Centre, studied the benefits and challenges of tiered architectures for the distribution of retail CBDC through commercial banks and payment service providers.

Ends/Friday, June 17, 2022
Issued at HKT 11:10