The Hong Kong Central Bank has partnered with 21 commercial banks to launch a trade finance platform. According to the central bank, the platform will be used to key in transactions and credentials. The platform will not use digital currencies. However, it will be the largest blockchain platform to be integrated in a bank.
Some of the banks that are participating in the program are Standard Chartered PLC and HSBC Holdings PLC.
Banking and global trade have been major beneficiaries of blockchain
The central bank of Hong Kong will next month launch its trade finance platform built on blockchain. The platform will use “blocks” to send data and information to the participating banks. Before deciding to partner with the government, HSBC showed interest in blockchain. The bank had indicated that the technology will be useful for the future global economy.
In the announcement, the central bank also gave details of the team that is developing the platform. Ping An group from China designed the whole distributed system. Financial advocates and community members have argued that the platform will be the biggest blockchain integration in the finance sector. The platform will create a network bringing together global banking systems through an immutable and distributed ledger.
The mission behind developing the new platform
According to the Hong Kong Monetary Authority, the blockchain-based trade finance platform will help save time and reduce paper work in routine supply-chain finance and trade finance transactions. Additionally, the platform will help in simplifying the verification process. This will be achieved by speeding up the whole process of confirming credentials. All the banks that are involved in the initiative will jointly own the platform.
Currently the global trade finance industry is valued at around $9 trillion. The current finance industry is able to accommodate several digital additions. However, this does not digitize transactions completely. This has resulted in loss of time and money and increased cases of double spending. The current financial system is also marred with cases of fraud. These challenges will be addressed in the new blockchain-based platform.