Finance leaders at Hong Kong FinTech expo support tokenisation as a means to improving business efficiency
The finance industry should embrace tokenisation along with other new technologies that can help improve business efficiency, but such launches should be made in a controlled environment to manage risks effectively, according to industry leaders at FinTech Week.
"Technology and innovation is very much part of our lives and we should embrace it," Laura Cha, chairman of Hong Kong Exchanges and Clearing (HKEX) said at the fintech expo on Thursday.
Technology can help improve operational efficiency and unlock new business opportunities, she said. But in order for technology to be applied and become mainstream, it must be in an environment that is "backed by certainty, stability and reliability", Cha added.
Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.
"It is very important that we balance innovation with governance, and as a regulator we need to make sure that our platform, and our system is robust and resilient," she said during the so-called fireside chat, which also included CEO of Standard Chartered Bill Winters.
Laura Cha, chairperson of Hong Kong Exchanges & Clearing Ltd. (HKEx), during the Hong Kong FinTech Week in Hong Kong, China, on Thursday, November 2, 2023. The conference runs through November 5. Photo: Bloomberg alt=Laura Cha, chairperson of Hong Kong Exchanges & Clearing Ltd. (HKEx), during the Hong Kong FinTech Week in Hong Kong, China, on Thursday, November 2, 2023. The conference runs through November 5. Photo: Bloomberg>
Hong Kong's Fintech week brought together some 300 speakers at a two-day conference. Organised by InvestHK, the Hong Kong government department that oversees foreign direct investments, it is set to attract more than 30,000 visitors, government officials, regulators and heads of major banks.
Tokenisation was a popular topic during the chat as the Securities and Futures Commission (SFC) recently released two guidelines regarding risk management of tokenised assets, regulatory expectations and additional protection requirements for publicly offered funds. In its guidelines, the SFC said it had observed a growing interest in tokenising traditional financial instruments among banking institutions.
"Tokenised assets can be much more efficient at executing transactions," said Winters. At the same time, building the right infrastructure to go with tokenised assets will be a task for all the key players, he added.
"We must recognise that there's an entire set of ecosystems, not just one, which needs to be built before you can get there," he said. "Regulators may be cautious about how the innovative economy is interacting with the established economy."
The biggest challenge for regulators is figuring out how to best work with the industry and new technologies, which is not just a constant challenge but also a great opportunity, he added.
Speaking about the development of new technology, HSBC Hong Kong's CEO Luanne Lim, said regulators should compare and contrast external policies versus those in Hong Kong. This would help align regulations and identify potential gaps faster.
"The challenge for both central and commercial banks is to design infrastructure which maximises benefits like faster and cheaper cross-border payments, preserves the best of the current system, and avoids creating new vulnerabilities in the global financial system," said Lim, speaking during a panel discussion.
The event came as the Hong Kong Monetary Authority (HKMA) announced that a digital payment system developed by Hong Kong and Thailand will be ready for use in the two jurisdictions from early December.
The HKMA, the city's de facto central bank, has been working with the Bank of Thailand towards linking their digital payment systems. The two sides are also collaborating on the "mBridge" Central Bank Digital Currency project, along with the central banks of China and the United Arab Emirates, on the use of CBDCs in settling international payments.
"CBDC infrastructure like mBridge has enormous potential," said Lim. "It enables rapid transactions, may reduce settlement risks further and the technology can also support advances like the tokenisation of assets."
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2023 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2023. South China Morning Post Publishers Ltd. All rights reserved.
