Hong Kong Monetary Authority (HKMA), the city's de facto central bank, is planning to work with regulators in Abu Dhabi to develop a cross-border trade finance system that is built with distributed ledger technology (DLT).
The HKMA signed a fintech cooperation agreement on Tuesday with the Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market, which supervises the financial market of the U.A.E.'s capital.
The HKMA said under the cooperation agreement, it will collaborate with the FSRA to develop innovative financial technology projects, with a specific interest focusing on DLT utilization in international trade finance.
Nelson Chow, chief fintech officer of the HKMA said in the announcement: "We are particularly pleased to start a dialogue with FSRA on the opportunity to build a cross-border trade finance network using distributed ledger technology."
The early-stage plan comes at a time when the HKMA has already started similar work with its counterpart in Singapore.
As previously reported by CoinDesk, the HKMA and the Monetary Authority of Singapore (MAS) have started testing the Hong Kong Trade Finance Platform (HKTFP), an HKMA-led trade finance proof-of-concept based on DLT since last year.
The report said at the time that over 20 global banks and financial institutions joined the test in an effort to advance the proof-of-concept to commercial production, which was expected to be ready by early 2019.
In a response to CoinDesk, the HKMA hinted that the HKTFP might provide a basis for any work with Abu Dhabi:
"The Financial Services Regulatory Authority of the Abu Dhabi Global Market has indicated interest in the Hong Kong Trade Finance Platform and would like to explore any cross-border cooperative opportunity in this area. The HKMA will continue to have the dialogue with them, including any possible cross-border trade finance infrastructure development between the two markets."
Hong Kong image via Shutterstock