The Hong Kong Monetary Authority (HKMA) has announced its collaboration with the Monetary Authority of Singapore (MAS) aimed at fostering the healthy development of fintech ecosystem in Hong Kong.

The authorities have signed a cooperation agreement on fintech to formalise their collaboration on referrals of innovative businesses, joint innovation projects, sharing of information and exchange of expertise. The collaboration with Singapore is one of the new developments on the HKMA’s Smart Banking initiatives announced recently.

According to the official release, the first collaborative initiative will be a joint project on trade finance. The project involves seven Hong Kong-based banks working on the commercialization of an HKMA-led, Distributed Ledger Technology (DLT)-based, trade finance proof-of-concept into a production system, dubbed Hong Kong Trade Finance Platform (HKTFP), to digitise and share trade documents, automate processes and reduce risks and fraud.

The HKMA is in discussion with the MAS on building a cross-border infrastructure to connect HKTFP with a similar trade platform in Singapore.

In addition to the blockchain trade finance initiative, the HKMA has published its second White Paper on DLT, with help from the Law Society of Hong Kong, eminent law professors, consultancy firms and the Hong Kong Applied Science and Technology Research Institute. The monetary authority said that it will turn the findings and advice in the second White Paper into a set of practical guidelines for the use of DLT in the banking sector in the future.

"I am very pleased to say that Hong Kong has made important progress in cross-border collaboration and the research on DLT applications. The collaborative efforts and enhanced research and talent development are the essential building blocks to facilitate financial innovation and prepare Hong Kong to advance to the new Smart Banking Era,” Norman Chan, the Chief Executive of the HKMA, said.