HK, China Authorities Sign MoU on Adopting Blockchain in Finance

Two subsidiaries of the Hong Kong Monetary Authority (HKMA) and the People’s Bank of China (PBoC) have collaborated to bring Blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Read this Term to the mainstream.

According to the signed memorandum of understanding (MoU) between Hong Kong Interbank Clearing Limited and the Institute of Digital Currency of the PBoC, they will connect eTradeConnect and the PBoC Trade Finance Platform to conduct a proof-of-concept (PoC) trial.

The participants are expected to start the PoC in the first quarter of next year.

“Once the connection has successfully been established, it will provide firms in both places with more convenient trade finance services and enable banks in Hong Kong to expedite the expansion of their trade finance business,” the announcement stated.

The collaboration comes at a time when the Chinese central bank is already working on a digital version of its fiat currency. Earlier a PBoC official revealed that the digital currency would resemble Facebook's proposed Libra, but be more centralized.

Mark Zuckerberg, in his testimony to the US Congress, also warned about Chinese dominance in the payment transfer market if Facebook fails to launch its digital currency due to regulatory hurdles.

Adopting DLT to make processes efficient

Earlier this year, the HKMA also partnered with the Bank of Thailand to conduct a joint research project - Project LionRock-Inthanon - to study the application of central bank digital currency (CBDC) to cross-border Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term. The two entities are focusing on facilitating HKD-THB payment-versus-payment (PvP) among banks in the two countries.

Moreover, to digitalize trade finance processes, the HKMA also collaborated with the Bank of International Settlements (BIS) to study the prospects in the region.

“The HKMA’s fintech initiatives have successfully created a vibrant fintech ecosystem. To lift Hong Kong’s fintech development to a new height, we must take a holistic ‘HK Inc.’ approach,” Eddie Yue, chief executive of the HKMA, said.

Meanwhile, the Chinese government is betting on blockchain technology as its President Xi jumping recently urged the country to capitalize on the sector.