The Bank of Israel is working with the Hong Kong Monetary Authority on testing a new digital currency against cyber security risks, the Bank of Israel told Bloomberg in a statement.
The joint project will start in the third quarter, using a two-tier central bank digital currency (CBDC), Bloomberg reported on Thursday.
The retail CBDC is being designed to allow intermediaries, such as banks, handle it with no financial exposure to their customers, and the testing process will assess whether this makes it less vulnerable to hackers.
Such an “exposure-free” CBDC may carry “less financial risk for the customer, more liquidity, lower costs, increased competition, and wider access,” Bloomberg cited the Bank of Israel as saying.
The Bank for International Settlements’ Innovation Unit will also take part in the trial.
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