Watchdogs in Hong Kong and Singapore have revealed full details of a new, digital corridor that will join the territories’ trade finance systems via a network of distributed ledger technology (DLT).
The announcement follows initial hints of the scheme that emerged among news of other, collaborative work in which the cities have engaged, as The Treasurer recently reported.
Unveiled on 15 November by the Hong Kong Monetary Authority (HKMA) and the Monetary Authority of Singapore (MAS), the new, cross-border infrastructure will comprehensively digitise trade and trade finance between the two urban sprawls.
Dubbed the Global Trade Connectivity Network (GTCN), the corridor will be designed with the capability to expand across the broader Asia-Pacific region – then, ultimately, around the world.
To drive the project forwards, HKMA and MAS have convened a Joint Working Committee comprised of officials from their own ranks, in addition to teams from Hong Kong Interbank Clearing Limited and the National Trade Platform Programme Office (Singapore).
At this year’s Singapore FinTech Festival, HKMA executive director Shu-Pui Li and MAS Financial Markets Development Department chief Bernard Wee signed a Memorandum of Understanding that outlined the terms of the venture.
During a workshop at the festival, the partners began joint talks with leading DLT solution providers looking to develop business and technical models for the GTCN. Those talks are likely to conclude in the first quarter of next year.
The GTCN itself, meanwhile, is expected to go live by early 2019. That will coincide with the planned go-live dates of the Hong Kong Trade Finance Platform and the trade finance modules of the National Trade Platform in Singapore: the very points that the GTCN will interlink.
HKMA chief executive Norman Chan explained: “The GTCN is going to remove the inefficiency and risks of fraud inherent in the existing paper-based system in trade finance.
“Once implemented, the interface – likely to be the first of this kind in the world – has been designed with an open architecture that would allow Hong Kong’s other trading partners to plug into it in future.”
He added: “We feel really excited about this project – it clearly demonstrates HKMA’s commitment to step up cross-border collaboration in fintech to better prepare Hong Kong to enter the new ‘Smart Banking Era’.”
MAS managing director Ravi Menon said: “Singapore – via the National Trade Platform – is committed to the digitisation of trade, which will transform the industry by streamlining processes and enhancing risk management.
“This innovative project with Hong Kong is an excellent showcase of how two, leading international financial centres in Asia can drive the transformation of trade and trade finance.”