This undated photo shows the building of the Hong Kong Monetary Authority. (PHOTO / IC)
HONG KONG – The Hong Kong Monetary Authority said it has successfully completed the proof-of-concept study on the technical feasibility of the commercial data interchange and announced progress on a planned multi-central-bank digital currency platform — programs that aim to facilitate small and medium-sized enterprise financing and cross-border trade settlement transactions.
The CDI has entered the pilot launch stage involving eight pairs of banks and data providers, and is expected to officially launch by the end of 2022. Participating banks in the CDI project have granted over 550 loan applications for a total HK$900 million ($116 million).
“When importers or exporters apply for business loans, banks can utilize the CDI data to approve the loans without the sole reliance on collateral, thus facilitating trade finance and cross-border payments,” HKMA Chief Executive Eddie Yue Wai-man said on the sidelines of the Hong Kong FinTech Week 2021 seminar on Wednesday. The event will wrap up the following day and be online-only on Friday.
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Meanwhile, the Multiple CBDC Bridge (mBridge) project has identified 15 potential business use cases that involves 22 private enterprises, including financial institutions, bank associations and stock exchanges.
In one of the use cases, testing of sample trade settlement transactions across 11 industries (such as semiconductors, medical equipment and garments) and four jurisdictions have begun on the trial platform and is expected to enter the pilot stage in 2022, with an aim to achieve a system that can support a full process of international trade settlement. The combined trade settlement amount of the selected four jurisdictions is estimated to reach $730 billion.
The HKMA also announced the launch of AML Regtech Lab, or AMLab, in which five banks will work with data experts using synthetic data for the first time to explore the use of digital footprints and conduct more comprehensive network analyses
The mBridge project was launched by HKMA, the Bank of Thailand, the Digital Currency Institute of the People’s Bank of China, the Central Bank of the United Arab Emirates, and the Bank for International Settlements Innovation Hub Hong Kong Centre.
“There are over 30 banks, the Hong Kong Stock Exchange and four central banks participating in the mBridge project. The next stage of the trial will focus on the scenario of cross-border payments. Banks’ real-time transactions will be put to the test in the mBridge platform. We encourage bank clients to try the platform,” Yue said.
HKMA also announced other initiatives in a bid to further cement Hong Kong’s position in the financial technology industry.
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The HKMA and the Bank for International Settlements Innovation Hub Hong Kong Centre concluded Project Genesis, which concept-tested the issuance of tokenized green bonds to retail investors in Hong Kong. The HKMA will further look into the feasibility of piloting the issuance of tokenized green bonds under the government’s green bond program.
The HKMA also announced the launch of AML Regtech Lab, or AMLab, in which five banks will work with data experts using synthetic data for the first time to explore the use of digital footprints and conduct more comprehensive network analyses. AMLab will strengthen banks’ capabilities to protect customers from fraud and financial-crime losses.
Regarding cross-border fintech cooperation, about 10 banks in Hong Kong have expressed interest in testing their cross-border fintech initiatives in Hong Kong and the cities of the Guangdong-Hong Kong-Macao Greater Bay Area via the network of the People’s Bank of China's Fintech Innovation Regulatory Facility and the HKMA’s Fintech Supervisory Sandbox. About half of these initiatives are related to and can be used in the context of the Cross-boundary Wealth Management Connect.
Funding support of HK$1 million will be provided under the Innovation and Technology Commission’s Public Sector Trial Scheme via the Fintech Supervisory Sandbox 3.0, for eligible projects in areas such as regulatory technology and cybersecurity. The HKMA also entered into memorandums of understanding with four local universities to foster collaboration in areas that include fintech talent development.