Hong Kong is seeking to build a blockchain-based trade financing system, a senior official said last week.

As reported by Caixin Global, James Henry Lau, Hong Kong’s Secretary for Financial Services and the Treasury, said that blockchain technology could provide great benefits to the countries participating in China’s Belt and Road initiative in the field of trade finance.

Launched by President Xi Jinping in 2013, the Belt and Road initiative aims to foster trade links between China and other countries. The initiative now includes 69 countries, regions, and international organizations.

Lau said that the initiative could leverage blockchain technology to eliminate the need for a central authority. He believes that the technology could help reduce the manual processes, investment costs, and time, traditionally required in trade financing, while also reducing the chances of fraud and making the system more efficient.

“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,” said Lau (as quoted by Block Tribune).

The announcement comes on the heels of a cooperation agreement between the Hong Kong Monetary Authority (HKMA) and the Monetary Authority of Singapore (MAS) on a blockchain trade finance initiative.