Singapore and Hong Kong’s chief financial regulators have announced they will jointly develop a “world first” cross-border trade platform powered by blockchain.
The Hong Kong Monetary Authority (HKMA) and the Monetary Authority of Singapore (MAS) signed a Memorandum of Understanding (MoU) to co-develop the cross-border infrastructure, which will utilise distributed ledger technology (DLT) to digitise trade and trade finance between Asia’s chief financial hubs. The scheme will be known as the Global Trade Connectivity Network (GTCN).
Based on DLT, the platform will create an “information highway” between the cities, making cross-border trade and finance “cheaper, safer, and more efficient”, according to the regulators.
The announcement of the GTCN marks the first tangible project to come out of last month’s historic HKMA-MAS fintech cooperation agreement.
Norman Chan, HKMA chief executive, said the GTCN will supplant the existing paper-based financial trade system, overcoming inefficiencies and fraud risks inherent in the manual process.
“We feel really excited about this project as it clearly demonstrates the HKMA’s commitment to step up cross-border collaboration in fintech to better prepare Hong Kong to enter into the new smart banking era.”
“Once implemented, the interface, likely to be the first of this kind in the world, has been designed with an open architecture that would allow Hong Kong’s other trading partners to plug into it in future,” Chan said.
The GTCN is expected to go live by early 2019, with plans to expand the network across the region and, eventually, globally. The project will initially be led by a joint working committee comprising the HKMA, MAS, Hong Kong Interbank Clearing Limited and the National Trade Platform Programme Office.
The MoU, signed between heads of the two authorities, was exchanged at the 2017 Singapore FinTech Festival. The regulators held a joint discussion with major DLT solution providers to develop business and technical models for the GTCN, which is expected to conclude in Q1 2018.