As digital currencies move from concept to infrastructure, three of the world's most consequential financial institutions — Hong Kong's central bank, the Bank of Israel, and the Bank for International Settlements — have joined forces to confront a question that will define the era: not whether to build public digital money, but whether it can be built safely. Project Sela, announced in mid-June 2022, turns the lens on cybersecurity vulnerabilities in two-tiered retail CBDCs, where digital currency flows through commercial intermediaries before reaching ordinary people. The stakes are not merel
Hong Kong teams with Israel, BIS on retail CBDC cybersecurity research
How to keep a retail CBDC safe from hackers
Mark
Why does Hong Kong need Israel and the BIS to figure out cybersecurity for a digital currency? Don't they have their own security experts?
Mimi
They do, but this is about learning from others who are further along. Israel has real fintech experience—they've already worked on China's digital yuan. And the BIS coordinates among central banks globally, so they see patterns across countries.
Luke
But the source doesn't actually say what the security vulnerabilities are. It just says they're studying them. We don't know what specific threats they're worried about.
Mimi
That's fair. The announcement is about the collaboration itself, not the findings. They haven't done the research yet.
Mark
So this is early-stage work, not a response to an actual breach or known problem?
Mimi
Right. It's preventive. Hong Kong is building a two-tier system where banks distribute the digital currency, and they want to make sure that distribution model is secure before they roll it out.
Luke
And we should note—the timeline is aggressive. They want to finish by year-end. That's six months to study cybersecurity for a system that will handle real money.
Mark
Does that seem realistic?
Mimi
It depends on the scope. If they're focused on specific vulnerabilities in the two-tier model, maybe. If they're trying to solve all CBDC security problems, no.
Luke
The source doesn't clarify what "completion" means. Is it a final report? Recommendations? A tested solution?
Mimi
It just says the project is expected to be completed by the end of the year. The details of what that deliverable looks like aren't in the announcement.
Mark
So we're watching to see what they actually produce and whether other central banks adopt it?
Mimi
Exactly. This could become a template for how others approach CBDC security, or it could be one data point among many.
The Pulse
- The race to launch retail CBDCs is accelerating globally, but the security architecture needed to protect them from cyberattack remains dangerously underexplored.
- Hong Kong, Israel, and the BIS have formalized their concern into Project Sela — a focused, time-pressured research effort aimed at identifying and closing vulnerabilities in two-tiered digital currency systems.
- The two-tier model at the heart of the research is already being piloted in Hong Kong through Project Aurum, meaning the threat landscape being studied is not hypothetical but actively taking shape.
- Israel brings strategic fintech credibility — its firms have already contributed to China's digital yuan — while the BIS lends the institutional gravity of a body that speaks for central banks worldwide.
- With a year-end 2022 deadline, the project's findings are poised to ripple outward, potentially setting the security benchmarks that other nations adopt as they accelerate their own digital currency rollouts.
As digital currencies move from concept to infrastructure, three of the world's most consequential financial institutions — Hong Kong's central bank, the Bank of Israel, and the Bank for International Settlements — have joined forces to confront a question that will define the era: not whether to build public digital money, but whether it can be built safely. Project Sela, announced in mid-June 2022, turns the lens on cybersecurity vulnerabilities in two-tiered retail CBDCs, where digital currency flows through commercial intermediaries before reaching ordinary people. The stakes are not merely technical — they are a rehearsal for how billions of people may one day trust, or distrust, the money in their pockets.
Hong Kong's central bank has partnered with Israel and the Bank for International Settlements to address one of the most pressing questions in modern finance: how to protect a retail central bank digital currency from cyberattack. Announced in mid-June 2022 and named Project Sela, the collaboration will spend several months examining the specific vulnerabilities of a two-tiered CBDC model — one where digital currency moves from the central bank to the public through commercial banks and payment providers, rather than directly to individuals.
Hong Kong is not approaching this from scratch. The HKMA launched e-HKD research last June and has since developed both technical and policy frameworks for a digital currency. A parallel initiative, Project Aurum, is already testing the two-tier distribution model. Project Sela is the natural next step — shifting the question from whether to build to how to build it without opening the door to attackers.
Israel's participation carries its own logic. The Bank of Israel sees a digital shekel as a tool for payment efficiency and market competition, and the country has cultivated genuine fintech depth — Israeli firm Bitmint contributed to early research on China's digital yuan. The BIS, meanwhile, brings the coordinating authority of an institution that sits above individual central banks and can translate local lessons into global standards.
The timeline is deliberately compressed, with results expected before the end of 2022. What emerges will likely shape not just Hong Kong's deployment decisions, but the security conversation among central banks worldwide — at a moment when the shift from exploration to implementation is no longer a distant prospect.
Hong Kong's central bank has joined forces with Israel and the Bank for International Settlements to tackle a problem that will only grow more urgent as digital currencies spread: how to keep a retail CBDC safe from hackers.
The Hong Kong Monetary Authority announced the collaboration in mid-June, naming it Project Sela. The three institutions will spend the next several months studying how to protect a two-tiered retail CBDC against cyber attacks. The structure they're examining is one Hong Kong has already begun testing through a separate initiative called Project Aurum, where digital currency would flow from the central bank to the public through commercial banks and payment service providers rather than directly to individuals.
Hong Kong has been moving steadily toward a digital version of its currency. The HKMA launched research into e-HKD last June and has since published both technical and policy designs for how such a system might work. Project Sela represents the next logical step: not whether to build it, but how to build it safely.
Israel brings its own motivation to the table. The Bank of Israel's deputy governor, Andrew Abir, framed a digital shekel as a way to create a more efficient payment system and inject competition into Israel's payment market. The country has already positioned itself as a source of financial technology expertise; the fintech firm Bitmint worked on China's digital yuan project during its early research phases, suggesting Israel sees CBDC development as both a technical and strategic opportunity.
The choice of partners reveals how seriously Hong Kong is treating the security dimension. The Bank for International Settlements, which coordinates among the world's central banks, brings institutional weight and global perspective. Israel brings hands-on fintech experience. Together, they're not just studying a theoretical problem—they're examining a specific vulnerability in a specific model that Hong Kong intends to deploy.
The timeline is tight. Project Sela is expected to wrap by the end of 2022, which means the research will move quickly from problem identification to recommendations. Those recommendations will likely influence not just Hong Kong's approach but the broader conversation among central banks racing to launch their own digital currencies. As more countries move from exploration to implementation, the security lessons learned here could shape how billions of people interact with money.
Notable Quotes
Providing an efficient payment system that will increase competition in the payment market is one of the primary motivations we've identified for a possible issuance of a digital shekel— Andrew Abir, Deputy Governor, Bank of Israel
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