Tokenization Revolution - Unleashing Banking's Growth Potential

“Tokenization Revolution – Unleashing Banking’s Growth Potential” was held on 22 May 2024, at IncuHub, HK Tech 300. The seminar was co-organized by Joint Electronic Teller Services Limited (JETCO), Laboratory for AI-Powered Financial Technologies Limited (AIFT), and City University of Hong Kong College of Business. The seminar aimed to address the latest developments in tokenization in Hong Kong and explore its potential within the banking industry. Over 50 executives from government, major banks and financial groups in Hong Kong participated in the event.

The seminar commenced with a welcome speech by Professor Houmin Yan, Director of Laboratory for AI-Powered Financial Technologies and Chair Professor of Management Sciences at City University of Hong Kong. He expressed gratitude for the support from the government and various parties that made the seminar possible and their contribution to the development of tokenization.

Welcome Speech – Professor Houmin Yan, Director of AIFT & Chair Professor of Management Sciences at CityU

This was followed by opening remarks from Mr. Joseph H.L. Chan, JP, Under Secretary for the Financial Services and the Treasury. Mr. Chan highlighted the Hong Kong government’s active efforts to foster asset tokenization and support local fintech innovation. He specifically mentioned Project Ensemble by Hong Kong Monetary Authority (HKMA), a new wholesale central bank digital currency (wCBDC) project aimed at facilitating seamless interbank settlement of tokenized money. wCBDC Sandbox will launch this year to research and test various tokenization use cases, including the settlement of tokenized real-world assets.

Opening Remarks – Mr. Joseph H.L. Chan, JP, Under Secretary for the Financial Services and the Treasury

Mr. Italo Borssatto, Adviser in the Bank for International Settlements’ (BIS) Innovation Hub in Hong Kong, delivered a speech on reshaping the digital future. He provided updates on the latest projects from BIS concerning Project mBridge and Project Dynamo, and shared insights on the HKMA’s Project Ensemble.

“Reshaping the Digital Future” – Mr. Italo Borssatto, Adviser in the Bank for International Settlements’ (BIS) Innovation Hub in Hong Kong

Professor Michael Wong, Associate Dean (Global Executive Programmes), Global EMBA Director, Associate Professor of Finance, and Affiliate Professor of the Academy of Innovation of City University of Hong Kong, explored the regulatory implications, challenges, and future outlook of cryptoassets, particularly from the perspective of the Bank of International Settlements (BIS) and the Basel Committee. He discussed the introduction of new capital rules for cryptoassets, effective January 1, 2026, and their impact on bank asset-liability management. Key challenges highlighted include managing risk weights for cryptoassets, ensuring financial stability, and addressing liquidity risks. Professor Wong provided a future outlook that emphasizes the need for banks to adopt tokenized assets, offer crypto custody services, and innovate to meet customer demands for digital financial products.

“Bank Asset-Liability Management, Implications from Basel Committee Rules on Cryptoassets” – Professor Michael Wong, Associate Dean (Global Executive Programmes), Global EMBA Director, Associate Professor of Finance, and Affiliate Professor of the Academy of Innovation of CityU

Mr. Paul Li, General Manager of Banking Circle, Greater China Region, focused on the transformation of banking in the Web3 era, particularly emphasizing the tokenization of Real World Assets (RWA). He contrasted traditional centralized systems with blockchain-based solutions like Ethereum and Hyperledger, highlighting benefits such as increased liquidity, fractionalization, and atomic settlement. Mr. Li discussed the advantages of tokenized deposits for multinational corporations and e-commerce marketplaces, including reduced reliance on SWIFT and improved financial efficiency. He also addressed challenges such as regulatory compliance, risk management, and the need for tech talent. The presentation concluded with insights into the future of banking, emphasizing the potential of programmable entities.

“Europe Development & Case Sharing to Discuss Hong Kong Market Potentials” – Mr. Paul Li, General Manager of Banking Circle, Greater China Region

The event concluded with closing remarks by Ms. Yvonne Che, CEO of JETCO. She expressed her hopes that the seminar provided participants with an opportunity to engage in further discussions and exchange ideas on tokenisation.

Closing Remarks – Ms. Yvonne Che, CEO of JETCO

Overall, the seminar shed light on the significant potential of tokenization within the banking industry. The insights shared by industry experts emphasized the transformative impact of tokenization on various aspects of banking, including interbank settlement, asset-liability management, fee-based banking services, and international payment systems. The event served as a platform for knowledge sharing and networking, fostering collaboration among industry professionals and paving the way for further advancements in tokenization within the banking sector.

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