Ripple is set to demonstrate and showcase a real estate asset tokenization solution at the Hong Kong Monetary Authority’s (HKMA’s) digital Hong Kong dollar (e-HKD) central bank digital currency (CBDC) pilot program.
Ripple will collaborate with Fubon Bank of Taiwan and others to demonstrate equity release with tokenized assets using the retail variant of the e-HKD CBDC.
Equity release, also known as a reverse mortgage, is the practice of a lender granting a homeowner access to the equity in their property, with repayment due only upon the sale of the home or the borrower’s death.
According to a statement from Ripple, tokenization can reduce friction in the equity release process and accelerate throughput for institutions.
According to the HKMA, the company is participating in the program’s so-called second rail, which “will take deep dives into use cases as well as application, implementation, and design issues relating to e-HKD.”
James Wallis, vice president of central bank engagements and CBDCs at Ripple, said in a Q&A, “Experiences emerging from the Rail 2 pilots will factor into any decisions by HKMA to launch an e-HKD later (Rail 3).”
The pilot project will utilize the Ripple CBDC Platform, a new private ledger with XRP Ledger technology and enhanced functionality, including offline transactions and non-smartphone use. Wallis added:
“All the pilot program partnerships that Ripple previously announced, including Montenegro, Palau and Bhutan, will leverage the CBDC Platform.”
Hong Kong’s CBDC research began in 2017. In a recent paper, the HKMA concluded, “While it appears that e-HKD may not have an immediate role to play in the current retail payment market, we believe that potential use cases for e-HKD can emerge rapidly.”
