Govt sponsered blockchain: based trade finance platform set to launch in hongkong

The Hong Kong Monetary Authority (HKMA), Hong Kong’s currency board and the de facto central bank is planning to launch a blockchain-powered trade finance platform. The project is initiated with a joint initiative of HKMA and collections of 21 leading banks as participating nodes including HSBC, Standard Chartered and Bank of East Asia Ltd.

The system is one of the largest and first government-backed initiatives to tackle issues related to worldwide trade finance industry. The new blockchain based system will be launched in two months time frame, will help in reforms by digitizing documents and automating processes, so the banking system can be protected against fraud and risk.

The HKMA officials explained the blockchain-powered trade finance platform:

“The aims of the platform are to reduce frauds related to trade finance and double financing, and therefore lead to increased credit availability and lowered financing costs in the long run. This may, in turn, help small and medium-sized enterprises (SMEs) access to trade financing,”

Trade finance system based on blockchain technology is not a new concept, last month European banks also announced a blockchain-powered trade finance platform known as We.Trade, built with the help of IBM which is now live. The blockchain powered trade finance system will help to unlock liquidity in the supply chain, which is the main reason for institutes and banks turning to the blockchain based system. According to a study conducted by Ernst & Young, some 2000 leading companies based in the US and Europe have about $1.3 trillion tied up in the system unnecessarily.