HomeCBDCBIS ProjectsShowcasing Retail CBDC Support for Access, Cybersecurity, and Competition in Project SELA...

Showcasing Retail CBDC Support for Access, Cybersecurity, and Competition in Project SELA with Cash Retention Features

The BIS Innovation Hub, in collaboration with the Bank of Israel and the Hong Kong Monetary Authority, conducted a joint experiment called Project Sela. The project aimed to test a new intermediary called the Access Enabler, which reduces liquidity and settlement risks, as well as operating costs. One key finding of Project Sela is that access to a retail central bank digital currency (rCBDC) does not compromise cyber security when designed with preventative measures. The project demonstrated the feasibility of a retail CBDC ecosystem that combines accessibility, competition, and preventative cyber security, while retaining the desirable features of physical cash. The project leveraged the expertise and learnings from previous experiments on rCBDCs, such as Projects Aurum and e-Hong Kong Dollar. The goal of Project Sela was to promote an accessible, competitive, and innovative rCBDC ecosystem that can serve various use cases. It aimed to lower barriers to entry for service providers and redistribute the activities related to rCBDC accounts among public and private actors. Another important goal was to achieve a digital means of payment that preserves the desirable attributes of cash, such as being free from credit risk, widely accessible, safe, providing instant settlement, operating at a low cost, and maintaining an appropriate level of privacy for end users. The rCBDC ledger in Project Sela is operated by the central bank, with personal identifiers obfuscated to preserve end user privacy. Retail payments are settled directly on the central bank’s balance sheet, ensuring instant finality for transactions. The Access Enabler, a novel type of intermediary, handles customer-facing rCBDC services without holding end users’ funds, eliminating the need for liquidity or settlement risk. This reduces costs, complexity, and risk compared to current payment service providers. Project Sela provided valuable insights into the cyber security, technological, legal, and policy aspects of a retail CBDC implementation. While the Hong Kong Monetary Authority has not yet made a decision on introducing a retail CBDC in Hong Kong, the outcomes of Project Sela will inform their ongoing exploration of a possible e-HKD. The project’s findings are expected to benefit other central banks in their evaluations of different retail CBDC architectures.

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