Hong Kong’s central bank is digging its heels deeper into blockchain with plans to launch a trade finance platform in cooperation with seven banks, reports in Reuters said.
Bank partners include HSBC and Standard Chartered, which will be working with the Hong Kong Monetary Authority (HKMA) in what reports said is one of the largest initiatives that involves government and bank collaboration. The partners will digitize trade finance documents and move them on a blockchain-powered platform to facilitate trade finance. The HKMA’s deputy chief executive said in a statement that the next milestone will be “to link up with other trade platforms in other jurisdictions to further facilitate cross-border trades.”
Last year, the HKMA announced a partnership with Singapore officials to use blockchain technology to integrate their perspective trade finance platforms and facilitate trade transactions between the two markets.
“This interface is likely to be the first of its kind in the world, in the application of DLT [distributed ledger technology], in solving the century-old problem arising from the inefficiency of the paper-based trade finance system,” HKMA head Norman Chan said at the time.
Also last year, Standard Chartered began piloting its blockchain trade finance solution in the Hong Kong Market as part of the DLT Trade Finance Working Group, formed by the HKMA’s FinTech Facilitation Office.
“We see significant potential in the application of smart contracts in trade finance and will continue to work with industry partners and regulators to make this a reality in the near future,” said Standard Chartered’s Gautam Jain, managing director and global head of Client Access.
In addition to blockchain, the HKMA has been focusing on faster payments functionality. In April, the central bank announced a collaboration with Japan’s central bank to interconnect their payment systems for accelerated cross-border payments.