Hong Kong’s Central Bank is Launching a Blockchain Trade Finance Platform
The Hong Kong Monetary Authority (HKMA) is preparing to launch a live blockchain trade finance platform. The bank, which serves as the de facto central bank of the autonomous region, will launch its trade finance platform within the next two months.
According to a report from the Financial Times on Monday, the HKMA’s blockchain platform has 21 banks participating as participating nodes, including HSBC and Standard Chartered. The project was initialed by seven banks and facilitated by the HKMA.
The targeted launch date for the platform is September 2018, according to CoinDesk, which cited an email it had received from the HKMA.
The blockchain-based trade finance platform hasn’t been a secret: the project has been public since early in 2017 when it was revealed that several Hong Kong-based banks had completed a test for the platform, along with the HKMA.
The banks are launching the platform in an effort to bring transparency to data sharing across financial institutions.
The seven banks initiating the project include the HKMA, Bank of China, Bank of East Asia, Hang Seng Bank, HSBC, and Standard Chartered Bank. Consulting firm Deloitte served as a facilitator for the project.
Although we’ve known about the project for nearly a year, the HKMA revealed new and important details earlier today,
“The aims of the platform are to reduce frauds related to trade finance and double financing, and therefore lead to increased credit availability and lowered financing costs in the long run,” explained the HKMA in their statement. “This may in turn help small and medium-sized enterprises (SMEs) access to trade financing.”
The HKMA expects more banks to gradually join the platform in the future.
Here’s why this is a big deal: when (and if) it goes live, the HKMA blockchain-based trade finance platform will be one of the first live blockchain trade finance platforms backed by a government institution.
Banks in Europe have already launched a similar initiative. Earlier in July, a group of European banks revealed a blockchain-based project called We.Trade. That platform was built in partnership with IBM and it has already gone live.
TradeIX, meanwhile, is a private company seeking to launch a similar product. TradeIX describes itself as “the world’s first open platform for trade finance.” That platform, powered by distributed ledger technology, will use blockchain-based solutions to seamlessly connect international financial institutions.
The HKMA may make an effort to expand its offering across the region. The HKMA is reportedly working with its partner agency in Singapore to develop a blockchain-based trade finance network to settle cross-border transactions. The partnership between the Singapore and Hong Kong-based institutions is scheduled to launch in early 2019.
The Hong Kong Monetary Authority was founded in 1993 to serve as the de facto bank of the autonomous Chinese territory. The bank is a government authority created when the Office of the Exchange Fund and the Office of the Commissioner of Banking merged, and the organization reports directly to the Financial Secretary of Hong Kong, a special government minister responsible for all financial and economic matters in the special administrative region of Hong Kong.
The HKMA is the de facto central bank of Hong Kong, and it implements monetary policies like the interest rate adjustment mechanism and the linked exchange rate system to boost economic growth in the region.
It’s a big deal when a central bank launches its own blockchain-based platform. The HKMA’s new blockchain trade finance platform could change the way the region’s banks do business for decades to come. Stay tuned for more information as the platform is scheduled to launch in September 2018.