The city’s de facto central bank, Hong Kong Monetary Authority (HKMA), is proposing to work with regulators in Abu Dhabi to establish a cross-border trade finance system that is built with distributed ledger technology (DLT).
On Tuesday, the HKMA approved a fintech co-operation agreement with the Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market, which oversees the financial market of the U.A.E.’s capital.
With an interest concentrating on DLT utilization in international trade finance, the HKMA stated under the co-operation agreement that it will cooperate with the FSRA to develop innovative financial technology projects.
In an announcement, the chief fintech officer of the HKMA Nelson Chow declared:
“We are particularly pleased to start a dialogue with FSRA on the opportunity to build a cross-border trade finance network using distributed ledger technology.”
Though the details on what platform the potential pilot may be built on are unknown, still, the original plan appears at a time when the HKMA has already begun similar works with its counterpart in Singapore.
Hong Kong Trade Finance Platform (HKTFP) – an HKMA-led and DLT-based trade finance proof-of-concept since last year – has been tested by the HKMA and the Monetary Authority of Singapore (MAS), based on a report. Over 20 global banks and financial institutions cooperated in the test with an effort to advance the proof-of-concept to commercial production, which was supposed to be ready by early 2019.