Hong Kong Monetary Authority to use blockchain platform

Hong Kong Monetary Authority (HKMA) Launches Blockchain Trade Finance Program with Ping-An

Blockchain, News

Hong Kong Monetary Authority to use blockchain platformThe Hong Kong Monetary Authority (HKMA) just announced they would be introducing a blockchain platform to make trade finance more efficient. Hong Kong is a global shipping hub. The HKMA is the equivalent of Hong Kong’s central bank. They worked with the financial group China’s Ping-An to create the new blockchain platform.

Global shipping finance is estimated to be worth at least USD 9 trillion on an annual basis. Hong Kong sits at the heart of Asian financial markets. The new platform will be owned by the banks that use it. Major banks like HSBC and Standard Chartered are reportedly ready to participate in this new program.

Proven technology

Ping-An has already used a similar platform in mainland China. Hong Kong chose Ping-An’s One Connect technology group to design the platform. The platform that is in use in China has shown some interesting benefits. The blockchain is perfect for trade finance. The banks that are financing the trades can use blockchain to gain a new level of information about the value of trades in a specific area.

In China, the ability of banks to understand the actual costs involved in a trade has reduced the overall level of overfinancing. Many companies ask for more money than is necessary for a specific deal. The old system of trade finance was opaque. Now the banks can see what other similar deals cost, and eliminate wasted money.

Smaller companies can also benefit from this new system. Gaining access to trade finance has been a challenge for SME’s. Banks require a lot of information about a company before they are willing to offer them trade finance. Ping-An’s system allows small companies to give their data over to the major banks easily, and gain access to the same finance mechanism that larger companies use.

Faster deals with Hong Kong Monetary Authority

The new system that the HKMA is backing will also make trade finance much faster. Instead of taking weeks to secure financing, it could happen in around one day. This saves huge amounts of work for the banks, and will probably drop the overall cost of doing international business.

The fact that Hong Kong’s central bank took the initiative to bring banks together has numerous advantages. Jessica Tan, Ping An’s deputy chief executive, said this on the HKMA’s new program, “Instead of individual banks trying to do this you have the regulator trying to bring the banks together.”

The Financial Times reports that as many as 21 banks will participate in the Hong Kong Monetary Authority (HKMA) system. As more major banks and shipping companies use blockchain-based finance and tracking solutions, it will be harder for companies that refuse to adopt blockchain into their business model.

Nicholas Say was born in Ann Arbor, Michigan. He has traveled extensively, lived in Uruguay for many years, and currently resides in the Far East. His writing can be found all over the web, with special emphasis placed on realistic development, and the next generation of human technology.

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