Bank for International Settlements and Central Banks Launch Project Sela: Unveiling the Future of Retail Central Bank Digital Currencies
Summary:
The Bank for International Settlements (BIS), along with the central banks of Hong Kong and Israel, has unveiled the results of Project Sela, a public-private partnership focused on developing a retail central bank digital currency (rCBDC). The project leveraged the diverse expertise of central banks and private firms to create an ecosystem that combines the benefits of cash and digitalization. The initiative introduces the Access Enabler, a financial infrastructure that simplifies customer-facing activities while ensuring user security. The system promotes wider access to rCBDC services and maintains the role of traditional financial institutions. However, the report also highlights the limitations of real-time gross settlement systems for small transactions.
The Bank for International Settlements (BIS), along with the central banks of Hong Kong and Israel, have published the findings of Project Sela. The project, a collaboration between the public and private sectors, aimed to develop a retail central bank digital currency (rCBDC) that combines the features of cash with the advantages of digitalization. Private firms such as FIS and M10 Networks provided core products, Clifford Chance conducted legal analysis, and Check Point Software Technologies handled cyber security. Project Sela introduces the Access Enabler, a new financial infrastructure that simplifies customer-facing activities while ensuring the security of users' rCBDC. The ecosystem enables immediate settlement through a real-time gross settlement system and allows funding institutions to manage accounts and convert rCBDC into bank deposits and cash. The access enabler acts as an intermediary, providing services like Know Your Customer compliance and routing. The project aims to foster competition and promote wider access to rCBDC services by reducing regulatory requirements for private financial institutions. Importantly, the project does not disintermediate traditional financial institutions, as it still relies on banks and other similar organizations. Users have full control over their digital wallets, while payments are settled by the participating central banks. However, the report acknowledges the limitations of real-time gross settlement systems and discusses potential technical solutions for small, frequent transactions.
Published At
9/12/2023 9:45:00 PM
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