On Tuesday, Nelson Chow, chief FinTech officer of the Hong Kong Monetary Authority (HKMA), and Richard Teng, CEO of the Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market (ADGM), signed a cooperation agreement to encourage financial innovation in Hong Kong and Abu Dhabi markets. The HKMA and the FSRA seek to support the expansion of innovative financial businesses in each authority's jurisdiction. Specifically, the two authorities are interested in developing a cross-border trade financial network using distributed ledger technology (DLT).
Chow expressed his enthusiasm for the agreement:
"ADGM's commitment to the pursuit of innovation resonates strongly with Hong Kong's ambitions. The co-operation between the HKMA and the FSRA would strengthen the two authorities in their respective roles and initiatives in fintech. We are particularly pleased to start a dialogue with FSRA on the opportunity to build a cross-border trade finance network using distributed ledger technology."
Teng echoed Chow's support:
"Hong Kong has remained a long-term strategic and economic partner of Abu Dhabi and the United Arab Emirates. This co-operation augments ADGM's commitment in supporting the growth and financial developments of Abu Dhabi and the Middle East, Africa and greater Asia regions. We look forward to working closely with the HKMA to support our fintech start-ups and our innovative businesses, from regulations to adoption, in advancing and applying their solutions to each of our respective financial markets and jurisdictions."
While specific details are sparse, Hong Kong has a history of exploring DLT solutions for international trade efforts. In October 2017, the HKMA and the Monetary Authority of Singapore announced they would be working together to use a blockchain platform to combat trade fraud. In November, James Henry Lau, secretary for financial services and treasury, commented on how blockchain could be a "great benefit" to making financial services more efficient.
The HKMA serves as the de facto central bank of the Hong Kong Special Administrative Region. The HKMA maintains currency stability, promotes the resilience and integrity of the Hong Kong financial system, helps to develop and maintain Hong Kong's financial infrastructure, and manages the Exchange Fund, which affects the exchange rate of the Hong Kong dollar.
The FSRA is a regulatory body aimed at developing Abu Dhabi's financial services sector. The authority's objectives are to establish a stable financial system, create fair and transparent markets, cultivate a safe financial infrastructure, provide a high level of regulatory transparency, and inform and empower consumers. The FSRA released guidance on virtual currencies and ICOs in October 2017.