This quarter in CBDCs: Digital Euro approaches, Hong Kong and Australia pilot CBDC use cases, Singapore and New York look at payments (and more)

Jul 2023


This quarter, Urszula McCormack and Emily Fox look at the latest developments in central bank digital currencies (CBDCs) worldwide – including several projects on which the KWM team has advised.

In our regular update, we share the shifts happening in the world of CBDCs – like the study that found 130 countries are exploring CBDCs. Want to know more about how CBDCs might reshape the payments industry? Read our Featured Insight on the Future of Money.

Across Asia…

The Hong Kong Monetary Authority (HKMA) has launched a trial for a proposed CBDC, e-HKD, with a report due in November. HSBC, Standard Chartered Bank and Bank of China (Hong Kong) are among 16 banks and payment companies involved. Each will select a small group of clients to test six potential uses for the e-HKD: online payments, payments in shops and restaurants, collecting government payouts, tokenised deposits, tokenised asset settlement, Web3 trading and clearing.

The Hong Kong Innovation Hub of the Bank for International Settlements has published two reports on “Project Dynamo”, in collaboration with Quinlan & Associates and with KWM’s support.  The first summarised the outcomes of its review of the potential wholesale use cases of CBDCs, deposit tokens, and stablecoins.  The second analysed various market developments and regulatory perspectives in Hong Kong and multiple other jurisdictions.

The Monetary Authority of Singapore (MAS) and the Federal Reserve Bank of New York have published the results of their joint CBDC Project Cedar Phase II x Ubin+. The purpose of the project is to consider the application of distributed ledger CBDC’s in improving wholesale cross-border multi-currency payments and settlements made using a vehicle currency. Vehicle currencies are highly liquid currencies that are used to facilitate a trade between 2 less liquid currencies. The project managed to achieve interoperability using hashed timelock contracts in all test scenarios.

MAS has also launched a White Paper proposing standards for the use of digital assets including CBDCs, tokenised bank deposits and potentially well-regulated stablecoins.

Mainland China is reportedly trialling e-CNY for payroll purposes.  The initiative in Changshu city (Jiangsu Province) would involve employees within the public service and state-owned enterprises receiving e-CNY for their regular wage payments.

The Bank of Thailand has launched a retail CBDC pilot project with 3 payment providers taking part; Bank of Ayudhya (Krungsri), Siam Commercial Bank and payments service provider 2C2P. The pilot will take place throughout August, and is designed for the bank to learn more about the technology rather than with a view to launch.

In Australia…

Blockchain infrastructure provider Canvas has facilitated the first foreign exchange transaction using eAUD as part of the RBA’s pilot project to develop a use case for a CBDC. The eAUD was used in a trade by crypto fund managers DigitalX and TAF Capital for a United States dollar stablecoin using an Ethereum layer-2 blockchain. A variety of potential use cases were piloted between 31 March 2023 and 31 May 2023, with a report assessing the results due to be published on 30 June 2023.

Several Australia banks and Imperium Markets were also key participants in the eAUD pilot. For example, two Australian banks (Westpac and The Commonwealth Bank of Australia) used the eAUD as payment for certificates of deposit issued by each bank, with trades facilitated by Imperium Markets. ANZ also tested multiple pilot projects, including those involving superannuation (pension) fund payments, offline payments and tokenised carbon credits.

Elsewhere abroad…

The Bank of England has released the results of Project Rosalind, which it collaborated with the Bank for International Settlements to complete. The Project explored the advantages and feasibility of a CBDC, with the findings indicating that a CBDC could facilitate faster individual payments, enable businesses to develop innovative financial products, and minimize instances of fraud.

The EU has released a proposed legal framework for a digital currency that would operate like a digital wallet. The purpose of the CBDC would be to complement cash. Elsewhere, European Central Bank (ECB) Executive Board member Fabio Panetta revealed that a digital Euro could launch in 3 or 4 years. The European Commission is due to deliver the proposed regulatory framework for a digital Euro in June 2023, and the Governing Council will decide whether to prepare and launch a trial in October 2023. The ECB has been working with a number of central banks around the world to ensure that the digital Euro would be interoperable with other CBDC’s.

The Swiss National Bank will issue a wholesale CBDC on Switzerland’s SIX digital exchange for a limited time as part of a pilot to test transactions with market participants.

The Bank for International Settlements has also published its “Lessons learnt on CBDCs” report to the G20 Finance Ministers and Central Bank Governors.  In that report, BIS outlines multiple key outcomes of its cross-border CBDC projects, as well as comparing key differentiators.  It also confirms that “A new phase of the mBridge project is testing additional business cases and transaction types, exploring interoperability with domestic payment systems, and introducing liquidity management tools.”

A global study has found that 130 countries are currently exploring CBDCs. 11 countries have launched CBDC’s to varying levels of success, 2 plan to launch next year, and pilots for both retail and wholesale CBDC’s are testing a large range of potential uses.

Working together, worldwide…

The International Monetary Fund (IMF) is working on a platform for CBDCs, as confirmed by IMF Managing Director Kristalina Georgieva to enable transactions between countries. The IMF has requested that central banks agree on a common regulatory framework for digital currencies that will allow global interoperability. The BIS has released a chapter of its annual report which discusses a similar concept – a unified ledger.

The Bank for International Settlements Innovation Hub has published an interim report on Project Mariana, its collaboration with the central banks of France, Singapore and Switzerland, on the use of wholesale CBDCs in tokenized foreign exchange trading. Specifically the project looks at automated market makers, also known as AMMs, token standards and network bridges to explore the feasibility of an international FX interbank market using wholesale CBDCs on a blockchain-based network.


We are involved in several CBDC and tokenisation projects and we love nothing more than helping our clients experiment, build new infrastructure and drive innovation. Subscribe to KWM Pulse using the button below for more.

Hong Kong virtual asset licensing gets real: Your critical checklist for June 1


Urszula leads the global fintech and blockchain team, advising some of the world’s most innovative companies.  Urszula has a penchant for structure charts, a passion for beautiful drafting and all the time in the world for people with wild ideas.  Urszula runs a large team in Hong Kong and Australia and splits her time between markets.  Urszula supports multiple governments and transnational bodies on digital economy development and major tech pilots.  She is always on the hunt for big juicy transactions, complex cross-border projects and the ultimate shade of red lipstick. In her spare time, she…

*deliberate ellipsis*

Dale's practice focuses on asset and structured finance, financial regulation and derivatives. Prior to joining KWM, Dale worked for international law firms in Sydney, London and Hong Kong and in derivatives legal at Societe Generale in Hong Kong and London. He also worked in Asset and Structured Finance in the front office at HSBC in Hong Kong for many years. Dale is a regular in the Best Lawyers list.

Max advises on structured and complex derivatives, clearing systems and financial markets regulatory frameworks.  His clients include Australian and international banks, corporates, funds, market participants, exchanges, clearing and payment systems, regulators and governments.

Max has played a key role in financial markets law reform in Australia. He advises both the domestic and international market in consultations with the Australian Government and regulators in relation to law reform matters.

Emily is a Melbourne-based Knowledge Consultant and a long-time financial services enthusiast. She specialises in topics ranging from banking to superannuation to fintech to CBDCs.

Subscribe to KWM Pulse Updates