The Hong Kong Monetary Authority (HKMA), the leading financial institution, has broadcasted the news of its strategic collaboration with the People’s Bank of China (PBOC) on its central bank digital currency (CBDC). The two leading banking authorities have entered into the partnership via a Memorandum of Understanding, which is dedicated to linking Hong Kong with the PBOC’s trade finance blockchain.
According to the reports, the highly anticipated partnership was concreted between a subsidiary of the Digital Currency Institute of PBOC and a subsidiary of the Hong Kong Interbank Clearing. The Chinese media clarified that the two entities would kickstart their work of strengthening the connection between Hong Kong’s native trade finance blockchain named eTradeConnect and the PBOC Trade Finance Platform to organize a proof-of-concept trial. The trial is scheduled to happen in the first quarter of the coming year. eTradeConnect was launched in 2018 and was the brainchild of a Chinese firm, OneConnect, which happens to be a subsidiary of Ping An.
The primary aim of the partnership is to give a boost to trade financing and infuse the unprecedented excellence of the blockchain technology into the Hong Kong banking system.
China’s trade finance blockchain was curated in synchronization with the Digital Currency Institute and is popularly known as the ‘Bay Trade Finance Blockchain Platform’ or BATFB. Launched in September 2018, the blockchain network processed $4.5 billion (30 billion Yuan). It boasted of 28 leading bank members. However, presently, the platform has a connection with 29 banking entities, which account for 485 branches in Shenzhen with an aim to have another 10 in the joining process in the future.
Several banks operate on both the blockchain networks via subsidiaries. The Hong Kong network’s banks include Chinese banks as well as international banks like ANZ, HSBC, Standard Chartered, and DBS Bank based in Singapore.
The Chief Executive of the HKMA, Eddie Yue, shared views on the current as well as future partnerships, stating that,
We have conducted pilot schemes with our peers in the region to try out blockchain solutions. For example, we have started a joint research project with the Bank of Thailand on implementing central bank digital currency in cross-border payments.
He further added that,
We have also completed a proof-of-concept test with we.trade platform to connect the digital trade finance platforms of Hong Kong and Europe. So far, it looks quite promising, and we have engaged Mainland China and Singapore on similar connections.