Hong Kong's banking regulator and de facto central bank has announced a new collaboration with Singapore aimed to digitize trade finance using distributed ledger technology (DLT).
Making the announcement today at a fintech event, the CEO of the Hong Kong Monetary Authority (HKMA), Norman Chan Tak-lam, said the joint project with the Monetary Authority of Singapore (MAS) will focus on a DLT proof-of-concept called the Hong Kong Trade Finance Platform (HKTFP).
Already having seen involvement from seven Hong Kong-based banks, the project is designed to digitize trade documents and reduce risk and fraud in the industry. Ultimately, the authorities plan the creation of a cross-border infrastructure that would serve as a bridge between HKTFP and a similar trade platform in Singapore.
According to the South China Morning Post, Chan described the initiative as a "breakthrough' for distributed ledger technology, adding:
"We firmly believe that the time has come for trade finance to move into the digital era."
The CEO also announced a number of other schemes aimed to boost collaboration between Hong Kong and the Chinese city of Shenzhen, making it easier for fintech firms to operate in both jurisdictions.
The HKMA, along with Hong Kong's Law Society, Applied Science and Technology Research Institute and other entities, has also published a DLT white paper – research that addresses the potential of the tech while acknowledging that it "cannot be a universal solution" for all financial applications and innovations.
According to Chan, the research serves as an "essential building block" helping to drive innovations in finance, as well as contributing to the development of "smart banking" in Hong Kong.
Hong Kong image via Shutterstock