12 Global Banks, Hong Kong C-Bank Set Up Blockchain Trade Finance Platform
The project, called eTradeConnect, targets Asia and will cooperate with we.trade, a DLT-based financial settlement platform with a focus on Europe.
Hong Kong’s central bank, the Hong Kong Monetary Authority (HKMA), along with a dozen of multinational banks including HSBC and BNP Paribas, have announced the official launch of their joint blockchain trade finance platform, called eTradeConnect. The project, which went live on Wednesday, targets the lucrative international trading settlement market with a focus on Asia, where Hong Kong is one of the leading financial centers.
eTradeConnect uses blockchain because of the ability to generate automated smart contracts, which can speed up the transaction process and save costs. The global trade finance transaction market, worth $9 trillion last year, has one significant problem - it heavily depends on a paper-based process, which makes transactions slow and cost market operators a lot of time and money.
“[eTradeConnect] demonstrates the willingness of the financial industry to adopt new technology in the new era of smart banking,” Howard Lee, Deputy Chief Executive of the HKMA said in a press release.
eTradeConnect conducted its first transaction on Thursday as the platform settled a purchase of supplies by furniture and household goods retailer Pricerite, according to an HSBC Hong Kong branch statement quoted by Reuters. eTradeConnect also signed a memorandum of understanding with we.trade, a DLT-based settlement project that targets Europe.
“The connection between eTradeConnect and we.trade platform paves the way for the digitalisation of cross-border trades in the Asia and Europe trade corridor, and will serve as a good reference for the future connection of eTradeConnect to other trade finance platforms,” Lee explained.
In October 2017, HKMA announced its intention to build a commercial blockchain finance trade product, called Hong Kong Trade Finance Platform, based on an earlier proof-of-concept (PoC) DLT trial. First, the project received the backing of seven banks: Australia and New Zealand Banking Group, DBS Bank (Hong Kong), Bank of China (Hong Kong), Bank of East Asia Limited, Hang Seng Bank Limited, Standard Chartered Bank (Hong Kong), and HSBC. Later, the project was rebranded to eTradeConnect, and five additional banks joined it: BNP Paribas, Agricultural Bank of China, Bank of Communications Co Ltd, Industrial and Commercial Bank of China (Asia), and Shanghai Commercial Bank.