Hong Kong and mainland China have partnered on a blockchain project to improve their trade finance operations.
The Hong Kong Monetary Authority (HKMA), the city's de facto central bank, announced the news on Wednesday, saying that an agreement has been signed between the subsidiaries of Hong Kong Interbank Clearing and digital currency institute of mainland China's central bank, to conduct a proof-of-concept trial.
The trial, which is expected to begin in Q1 2020, aims to connect HKMA’s blockchain-based trade finance platform eTradeConnect and mainland China central bank’s Trade Finance Platform.
“Once the connection has successfully been established, it will provide firms in both places with more convenient trade finance services and enable banks in Hong Kong to expedite the expansion of their trade finance business,” said the HKMA.
eTradeConnect was launched in Oct. 2018 to improve trade efficiency, and currently has 12 banks on board, including HSBC and Standard Chartered, as its members.
The HKMA will also explore the Bank of International Settlements’ Innovation Hub in Hong Kong on the use of blockchain technology to digitize trade finance processes, per the announcement.
"To lift Hong Kong’s fintech development to a new height, we must take a holistic ‘HK Inc.’ approach,” said HKMA CEO Eddie Yue.