The Hong Kong Monetary Authority (HKMA) and Bank of Thailand (BOT) jointly announced this week that they launched a new cross-border payment-versus-payment (PvP) link between Hong Kong’s US Dollar real time gross settlement (RTGS) system and Thailand’s Thai Baht RTGS system (BAHTNET).
According to an HKMA press release, the new PvP option will eliminate settlement risk in foreign exchange transactions between the US Dollars and Thai Baht by ensuring the simultaneous delivery of US Dollars in Hong Kong and Thai Baht in Thailand. Additionally, Thai banks can use the link to settle their USD and THB denominated foreign-exchange transactions, as well as a mechanism for mitigating forex settlement risk.
“This new PvP link provides a safer and more efficient arrangement for settling foreign exchange transactions,” Peter Pang, Deputy Chief Executive of the HKMA, said in a statement. “It is our USD RTGS system’s third cross-border PvP link in the Asian region. It has been built based on the proven model of the existing PvP links with Malaysia and Indonesia. The implementation of this link sets another excellent example of central bank cooperation to provide solutions to enhance regional financial stability and meet market needs.”