HKMA to cooperate with Shenzhen, Singapore on fintech development
Chief executive Norman Chan lays out blueprint to ‘digitise’ trade finance using blockchain technology
Hong Kong Monetary Authority (HKMA), the city’s banking regulator and de facto central bank, has announced new agreements with Singapore and the city of Shenzhen to encourage further collaboration on fintech development.
“It is crucial for Hong Kong to enhance collaboration with other fintech centres,” said Norman Chan Tak-lam, its chief executive, speaking on the third day of Hong Kong Fintech Week 2017 on Wednesday.
Financial services regulators around the world are looking at how to cooperate better on building common frameworks within which banks and technology firms use new ideas that work seamlessly across borders.
Chan signed a memorandum of understanding between the HKMA and the Monetary Authority of Singapore on Wednesday to formalise the relationship between the two watchdogs.
The first project to be covered by the scheme will be an attempt to link the two jurisdictions’ efforts to use distributed ledger technology (DLT), commonly known as blockchain, in trade finance.
Seven banks in Hong Kong have been working on the Hong Kong Trade Finance Programme, which uses DLT to rationalise procedures, which will now be linked with similar efforts in Singapore.
“This is a breakthrough for distributed ledger technology, and we firmly believe that the time has come for trade finance to move into the digital era,” said Chan.
“It’s good to see this programme extended to Singapore, there is no point having a trade finance initiative just within Hong Kong,” said Jolyon Ellwood-Russell, a partner at law firm Simmons & Simmons. “To be really successful, the programme needs to be extended to more countries in Asia. Hong Kong and Singapore are both free ports; there is a limited amount of trade that goes between them.”
Chan also announced a number of schemes to encourage collaboration between Hong Kong and neighbouring Shenzhen as part of the Guangdong-Hong Kong-Macau Greater Bay Area project, including strategies to make it easier for Hong Kong fintech companies to operate in the southern Chinese metropolis, and vice versa.
“Memoranda of understanding are important, but they don’t have any effect unless there is the strong leadership to follow them up,” Bart Shilton, former commissioner of the US Commodities & Futures Trading Commission, told a panel discussion following the signing ceremony.
Shilton, however, said he was confident that in Hong Kong’s case this would happen.
Chan said the agreements were part of the HKMA’s wider smart banking initiative which he launched last month.
As well as cooperation with other jurisdictions, that programme includes a faster payment system being planned in Hong Kong, to be rolled out next year, and projects encouraging its banks to open up their systems to technology players.