Israel and Hong Kong Team Up to Test Digital Currency Cyber Risk
The Bank of Israel is currently working with the Hong Kong Koong Monetary Authority to test a new cryptocurrency to counter cybersecurity risks.
The project is expected to use a two-tier central bank digital currency (CBDC) in Q3 2022.
The retail CBDC is designed to allow intermediaries, such as banks, to handle it without financial exposure to their customers. The testing process will assess whether this makes it less vulnerable to hackers.
Central banks are at varying stages of developing digital currencies
Analysts at Bank of America Corp. have argued that central banks will inevitably launch their digital coins to ward off the risk of losing monetary control to decentralized or adopted digital currencies like a digital dollar.
The “exposure-free” CBDC is assumed to carry “less financial risk for the customer, more liquidity, lower costs, increased competition, and wider access,” the Bank of Israel said.
The Bank for International Settlements’ Innovation Unit will also participate in the trial.
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