The Hong Kong Monetary Authority, which acts as the de facto central bank of Hong Kong, is launching a blockchain-based that aims to link 21 different banks, including giants Standard Chartered and HSBC, in a bid to streamline the $9 tln global trade finance industry, reported the Financial Times.
“Instead of individual banks trying to do this you have the regulator trying to bring the banks together,” said Ping An Group deputy chief executive Jessica Tan. Ping An’s finance technology firm OneConnect, which is responsible for designing the Hong Kong blockchain-based trade finance platform, said it has already implemented the system in the mainland China.
The project is by far the largest government-led blockchain initiative trade finance platform to go live and one of the earliest to have government backing.
When fully implemented, the technology should reduce the paperwork and transaction time required to conduct routine trade finance and supply-chain finance transactions. Blockchain allows faster verification of the traditionally complicated financial process and confirms the documents presented by the parties involved.
Under the plan, all the linked up banks will co-own the platform with the Hong Kong regulator.
Tan explained that one of the main features of the planned blockchain-based trade finance platform is that it can assist small firms gain wider access to supply-chain trade and finance. Usually, small companies do not enjoy the financial services offered by traditional banking services because of the amount of time needed to sign up new clients.
However, OneConnect said their blockchain-based system could fast-track providing essential information to companies at a lower cost that would make trade finance business attractive to smaller businesses. In addition, the blockchain-based trade finance platform would make it easier to detect fraudulent transaction.
Hong Kong SFC to monitor ICOs, cryptos
This latest development from the Monetary Authority comes less than a month after the territory’s financial watchdog, the Securities and Futures Commission (SFC), said in its annual report it would closely monitor initial coin offerings (ICOs) and exchanges that would require specific regulatory oversight.
“New technologies provide convenience for investors but come with risks. We keep a close watch on cryptocurrencies and initial coin offerings, intervening where appropriate. We also launched the SFC regulatory sandbox for qualified firms to conduct regulated activities utilizing financial technologies,” the SFC said in its published report.