Mainland China, Hong Kong and Macau eye closer cooperation to boost fintech innovation in Greater Bay Area
- The PBOC, HKMA and the Monetary Authority of Macau plan to link up their fintech regulatory frameworks to promote innovation in the Greater Bay Area
- ‘Arrangement will provide a more friendly supervisory environment for cross-boundary fintech development,’ HKMA CEO Eddie Yue says
Financial regulators from mainland China, Hong Kong and Macau have proposed to undertake stronger collaboration between the three jurisdictions to promote fintech in the Greater Bay Area.
The People’s Bank of China (PBOC), the Hong Kong Monetary Authority (HKMA) and the Monetary Authority of Macau plan to link up their fintech regulatory frameworks to support the goal.
The three authorities will jointly facilitate “high quality financial development” in the Greater Bay Area, according to a memorandum of understanding (MOU) signed at the annual Financial Street Forum in Beijing.
“This arrangement will provide a more friendly supervisory environment for cross-boundary fintech developments,” HKMA CEO Eddie Yue said in a statement on Thursday. “The HKMA will continue to seize the opportunities in the Greater Bay Area and work closely with the mainland and Macau in promoting the further development of fintech innovation in the region.”
The development comes despite Beijing’s tightening control over its financial system. The country’s top leadership pledged to “comprehensively enhance the Communist Party’s leadership in financial work” at last month’s central financial work conference, which was renamed from the national financial work conference to highlight direct supervision by the party.
However, the governing model of “one country two systems” provides a testing ground for cross-boundary financial innovation, with mainland China and Hong Kong signing a similar MOU in October, vowing to improve fintech supervisory exchanges.
That MOU called for linking up the PBOC’s and HKMA’s regulatory facilities on fintech innovation and fintech supervisory sandbox. The aim of the agreement is to create a network that will make it easier for fintech companies in mainland China and Hong Kong to set up cross-border businesses.
“The ‘network link-up’ aims to provide a ‘one-stop platform’ to allow eligible financial institutions and technology firms to conduct pilot trials of cross-boundary fintech initiatives, concurrently in Hong Kong and the mainland’s Greater Bay Area cities,” the HKMA said.
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A month earlier, Yue said the development of the bay area is a key strategic direction for China’s 14th Five-Year Plan, which emphasises high-quality economic growth driven by technology innovation.
The same month, Macau’s monetary authority said it would set up its own fintech regulatory framework, allowing companies and financial institutions in the region to roll out pilot programmes to “a limited number of participating clients”.
Macau’s de facto central bank said the pilot programmes will allow fintech firms to gather early user feedback on their projects, expedite their efficiency, and reduce development costs.
Fintech development in the Greater Bay Area has been attracting the attention of economic planners, with regulators and bankers calling for broader capital flow between Hong Kong and the rest of the bay area cities to advance the region’s economy.
“I think we should take a bolder step in building a special bridge between Hong Kong and the Greater Bay Area,” Norman Chan Tak-lam, the former CEO of HKMA said at the Global Financial Leaders’ Investment Summit on Tuesday.
Chan, who retired in 2019, called for “freer movement of capital” within the bay area using blockchain, saying that the technology could be used to test its impact on capital raising and other cross-boundary economic activities.
