Hong Kong Government to Establish Blockchain-Based Trade Financing System
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The government of Hong Kong is planning to create a Blockchain technology-based trade financing system. The system is expected to benefit the country in its participation in China’s Belt and Road Initiative.
In its comment at a forum on Nov. 10, 2017, Hong Kong’s Secretary for Financial Services and the Treasury, James Henry Lau, claimed that Blockchain could greatly reduce the huge input of human resources and time that trade financing generally requires. He added that the technology can facilitate trading activities conducted under the Belt and Road program.
“This technology could cut the huge input of human resources and time that trade financing traditionally requires, reduce chances of fraud and lower companies’ investment costs through more efficient settlements. Trade along the Belt and Road is mostly conducted by small and medium-sized enterprises, so Blockchain’s distributed ledger technology could help by cutting out the need for a central organization and middlemen.”
What is the Belt and Road project
China’s Belt and Road program is designed to bolster trade links between China and its global partners. The initiative was launched by Chinese President Xi Jinping in 2013. The program currently has 69 countries, regions and international organizations as partners.
In September 2017, several newspapers in Hong Kong reported that the Special Administrative Region’s monetary authority was planning to make equity investments in several Belt and Road infrastructure projects.
Hong Kong’s previous foray into Blockchain-based trade finance
Hong Kong has already ventured in several Blockchain-backed trade finance projects in the past. In March, its monetary authority successfully completed a proof-of-concept initiative on the use of Blockchain to digitize contracts and reduce the risk of fraud and duplicate transactions.
Hong Kong’s central bank has also partnered with its Singapore counterpart to advance a Blockchain-based project to maximize trade and financing between the two global financial centers.