The Bank for International Settlements and the Central Banks of Hong Kong and Israel have concluded initial testing for their retail central bank digital currency
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In a groundbreaking development that has the potential to revolutionise the digital payments landscape, the Bank for International Settlements (BIS), in collaboration with the central banks of Hong Kong and Israel, unveiled the results of Project Sela on September 12.
Notably, Project Sela is a public-private partnership aimed at creating a Retail Central Bank Digital Currency (rCBDC) that combines the advantages of physical cash with the efficiency of digitalisation.
At the heart of Project Sela's success is the collaboration between central banks and select private sector entities, each bringing their unique strengths to the table. The key private participants in this initiative include fintech giants FIS and M10 Networks, which are responsible for providing core products. Legal analysis is overseen by Clifford Chance, while Check Point Software Technologies handles cybersecurity.
Within the Sela ecosystem, the central bank issuing an rCBDC maintains a ledger of pseudo-anonymous end-user accounts. This allows for instantaneous settlement through a Real-Time Gross Settlement (RTGS) system, enhancing transaction efficiency compared to traditional methods.
As intermediaries, funding institutions manage users' accounts and facilitate the conversion of rCBDC into bank deposits or cash, making it accessible to a wide range of financial institutions. This inclusivity is expected to foster healthy competition and expand user access to digital financial services, benefiting small and medium-sized enterprises (SMEs), charitable organisations, and e-commerce providers.