HKMA partners up with Brazilian central bank to test cross-border tokenization

The Hong Kong Monetary Authority (HKMA) announced a new partnership with Banco Central do Brasil (BCB) to advance cross-border tokenization initiatives, joining their respective digital currency infrastructures to conduct experimental transactions under Project Ensemble and Brazil’s Drex pilot program.

The HKMA and BCB are exploring cross-border settlement models, focusing on payment-versus-payment (PvP) and delivery-versus-payment (DvP) systems applicable to trade finance and carbon credits. The partnership utilizes HKMA’s Ensemble Sandbox and BCB’s Drex platform to test these settlement scenarios across a range of financial use cases.

Project Ensemble and Drex

The HKMA launched Project Ensemble in 2023 to evaluate tokenized assets and their potential to improve various financial services. This Sandbox initiative, unveiled in August, builds on HKMA’s long-standing interest in distributed ledger technology (DLT) as a way to optimize payments and settlements.

The Ensemble Sandbox focuses on four primary areas: fixed income and investment funds, liquidity management, green finance, and trade and supply chain finance, each focused on reducing the costs and delays traditionally associated with cross-border payments.

Named Drex, the Brazilian CBDC aims to integrate seamlessly with financial services providers to offer real-time settlement solutions. Currently involving over 70 companies, Drex has moved through multiple phases, covering 13 key themes ranging from e-commerce payments to real estate transactions, all geared toward advancing Brazil’s financial ecosystem through tokenization.

BCB’s Drex pilot program, announced earlier this year, represents Brazil’s ambitions for digital currency. It creates the infrastructure for a tokenized financial market backed by a central bank digital currency (CBDC).

Legacy of cooperation

HKMA and BCB’s partnership builds on a 2018 agreement to foster innovation in financial services between their jurisdictions. Both institutions have consistently worked to shape the international regulatory landscape for digital currencies and tokenized assets.

HKMA’s active role in the Bank for International Settlements’ (BIS) Project mBridge also highlights its commitment to cross-border CBDC projects. Project mBridge, which involves central banks from multiple regions, including the People’s Bank of China, has conducted trials for cross-border payments using a shared DLT platform, bringing promising results in reducing the friction often seen in foreign exchange settlements.

The HKMA and BCB’s collaboration reflects a global shift toward asset tokenization, with major economies exploring similar solutions to improve market transparency, regulatory compliance, and efficiency.

Many central banks see tokenization as a way to securely represent ownership rights in real assets—ranging from carbon credits to real estate—while reducing intermediaries in cross-border transactions.

The HKMA’s Sandbox and BCB’s Drex provide structured environments to evaluate these possibilities and solve common challenges, such as regulatory alignment and technical compatibility, which are essential for global adoption.

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