Hong Kong’s financial regulator launched a new sandbox initiative at testing tokenization use cases across asset classes and real-world applications in the financial sector.

The Hong Kong Monetary Authority has launched its new initiative dubbed “Project Ensemble Sandbox” in a bid to double down on its tokenization efforts of real-world assets.

In an Aug. 28 press release, the HKMA said the initiative aims to test and refine the use of tokenized money for interbank settlements and transactions involving tokenized assets. The sandbox is said to focus on four main themes for its initial round of experimentation: fixed income and investment funds, liquidity management, green and sustainable finance, and trade and supply chain finance.

The HKMA says banks have already connected their tokenized deposit platforms to the sandbox, allowing for real-time testing of payment-versus-payment and delivery-versus-payment settlement mechanisms, without naming them.

In a separate development, Ant International, a major Chinese tech firm, revealed its participation in the sandbox with a focus on liquidity management. The company will work with Hong Kong branches of Standard Chartered Bank and HSBC to develop a global liquidity management solution that supports real-time, cross-border payments.

HKMA Chief Executive Eddie Yue commenting on the initiative said the sandbox marks a “significant step forward for the HKMA and the industry to explore the application of tokenization in real-life business scenarios,” adding that with the latest development it wants to further drive innovation and progress in the Hong Kong tokenization market.