Hong Kong and Singapore Will Launch Blockchain-Based Project to Link Their Trade Finance Platforms
Hong Kong and Singapore announced that they are going to cooperate
on a cross-border trade project based on Blockchain technology by linking their trade finance platforms. The announcement from Hong Kong Monetary Authority reads: “The Hong Kong Monetary Authority (HKMA) and the Monetary Authority of Singapore (MAS) signed and exchanged a Co-operation Agreement (“Agreement”) in Hong Kong today (25 Oct. 2017) to strengthen co-operation on fintech, with a view to bolster ties between the two cities and fostering fintech development within the region.” Last year, HKMA with banks including HSBC and Standard Chartered worked on building a trade finance platform by using Blockchain technology to digitize and share trade documents, automate processes and reduce the risk of fraud.
At the same time, Singapore planned to build a similar platform as well. The cooperation between Hong Kong and Singapore on this project will “enhance the trade finance corridor between the two financial centers,” according to Ravi Menon, managing director of MAS. What’s more, the platform could significantly increase the efficiency of trade finance in the future. It will replace humans to do time-consuming paperwork. HKMA and MAS stated that linking the two platforms is just a part of a broader plan between their future collaboration on the Blockchain and other fintech projects. Details about the cooperation will be announced by the two authorities next month.
Threat of Blockchain and Cryptocurrencies Distant But Inevitable, Says Moody’s
Moody’s Investors Service analyst Stephen Sohn and his team have reassured the US payments sector that the threat of Blockchain technology and digital currencies is still distant, but businesses will eventually adopt the technology. The team claimed that Blockchain is a disruptive technology and may compete against the payments sector in the long-term. In their report “Consumer Digital Payments – US,” Sohn and his team also highlighted several “tech-enabled entrants” that are revolutionizing the electronic payments market in the US.
Part of the report reads:
“Providers that are considering adopting Blockchain technology, which was originally created as a platform for the Bitcoin ‘cryptocurrency,’ may pose another potential threat to all of the current payment constituents. Blockchain is a chain of blocks of encrypted information that form a database or ‘ledger,’ which may eventually lessen the need for the intermediary platforms that currently approve, clear, and settle payments.”
Blockchain benefits financial services industry
Meanwhile, Moody’s associate managing director, Sean Jones and his team also released a separate report in April claiming that Blockchain has several possible applications and benefits beyond the leading digital currency Bitcoin. They said that the technology can revolutionize the clearing and settlement sector and it can also “promote transaction transparency, improve data security, and lessen the risk of a single point of failure.”
However, Jones and his team cited several obstacles that should be resolved before the economics of investments in the technology can be realized. Among these hurdles are the technical issues related to interoperability and scalability, as well as disagreements on industry standards and terms of collaboration. The report also highlighted the generally supportive stance shown by financial services regulators on Blockchain, but cited the lack of definitive view on how the technology will eventually be treated.