Today, October 25, 2017, the Hong Kong Monetary Authority (HKMA) and the Monetary Authority of Singapore (MAS) announced that they will be linking their blockchain-backed trade finance platforms together in an attempt to combat fraud in trade. This is a continuation of the efforts HKMA started in 2016, when it began working with HSBC Holdings PLC and Standard Chartered PLC banks. Likewise, MAS has developed Project Ubin, an Ethereum blockchain platform that demonstrated concrete use cases for the technology in Singapore.
According to the report, MAS and HKMA have issued a joint statement indicating that the collaborative effort is part of a larger plan to couple together FinTech and blockchain projects between the two regions.
At a recent FinTech conference, head of the HKMA Norman Chan stated, "This interface is likely to be the first of its kind in the world in the application of DLT in solving the century-old problem arising from the inefficiency of the paper-based trade finance system."
Banks involved in testing Project Ubin, including Bank of America Merrill Lynch and HSBC Limited, as well as government organizations like the Infocomm Development Authority of Singapore are seeking to exploit the capabilities of blockchain provenance systems to improve efficiency and security for transactions such as letters of credit (LOC); LOCs support some $2 trillion of transactions in the importer/exporter market, but can be difficult to manage, as they generate a copious amount of time-consuming paperwork.
According to Chan, the project will be able to digitize trade documents, automate processes, and reduce fraud risk, while helping to eliminate human errors from the document sharing process.