The Bank for International Settlements (BIS) Innovation Hub Hong Kong Centre in collaboration with the Hong Kong Monetary Authority (HKMA) and Hong Kong Applied Science and Technology Research Institute (ASTRI) embarked on a challenge to design a full-stack central bank digital currency (CBDC) system.
After a year of dedicated development, Project Aurum successfully completed its prototype. The primary objective of Project Aurum was to create a functional prototype to be shared as a public good within the central banking community. The project’s core principles revolved around safety, flexibility, and privacy.
As a result, Project Aurum achieved the creation of a two-tier retail Central Bank Digital Currency (rCBDC) system. This system consists of a wholesale interbank system and an e-wallet system, where a validator mechanism plays a crucial role in preventing over-issuance and double-spending.
Several groundbreaking achievements were realized during the course of Project Aurum. Firstly, two distinct rCBDC architectures were implemented: intermediated CBDC and CBDC-backed stablecoins, carefully considering the trade-offs between different CBDC structures. Secondly, by utilizing the UTXO (Unspent Transaction Output) approach, the tokens’ traceability to their backing assets was enabled, ensuring end-users’ safety in case of commercial bank bankruptcy. Thirdly, the two-tier architecture enhanced end-users’ privacy as the interbank system did not retain any personal data. Lastly, the decoupling of the wholesale and e-wallet systems bolstered cyber resilience through privilege separation and network segmentation, minimizing interactions between retail and wholesale activities.
One goal of Project Aurum was to contribute significantly to the central banking community, serving as a foundation for further research and exploration into the realm of Central Bank Digital Currencies (CBDCs).
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