HONG KONG (Reuters) – Hong Kong’s banking regulator and 7 banks, consisting of HSBC Holdings PLC ( HSBA.L) ( 0005. HK) and Requirement Chartered PLC ( STAN.L) ( 2888. HK ), on Tuesday stated they will collectively launch a trade finance platform in September utilizing blockchain innovation.
The platform will be one of the largest examples worldwide of a government-led, cross-bank effort to reform the multi-billion dollar trade financing sector using the distributed ledger innovation that underpins digital currencies such as bitcoin.
The sector is often described as among the most manual and paper-orientated parts of the monetary services market.
The blockchain project is aimed at digitizing documents and automating procedures to decrease risk and increase the financing capability of the banking market, stated Howard Lee, deputy president of the Hong Kong Monetary Authority (HKMA), the territory’s de facto main bank and banking regulator
“The next major turning point … is to connect with other trade platforms in other jurisdictions to further facilitate cross-border trades,” Lee stated in a joint declaration with the taking part firms.
A 2017 study by the Asian Advancement Bank found the worldwide trade financing gap – the quantity of unmet need for trade finance – was $1.5 trillion, 40 percent which stemmed from the Asia-Pacific area.
Market participants hope emerging innovation, consisting of blockchain, will permit them to serve more customers while also serving existing clients more successfully.
To that end, banks, federal governments and technology companies have been buying technology for trade financing.
In May, HSBC and ING Groep NV ( INGA.AS) stated they carried out the world’s very first trade financing transaction using a single blockchain platform. The platform, Corda, was developed by New York-based blockchain consortium R3.
The other banks associated with the Hong Kong initiative are BOC Hong Kong Holdings Ltd ( 2388. HK ), Hang Seng Bank Ltd ( 0011. HK ), Bank of East Asia Ltd ( 0023. HK ), Australia and New Zealand Banking Group Ltd ( ANZ.AX) and Singapore’s DBS Group Holdings Ltd ( DBSM.SI).
HK). Reporting by Alun JohnEditing by Christopher Cushing