A cooperative initiative between key trade financing platforms in mainland China and Hong Kong has officially commenced trial operation.
The Chinese central bank’s Trade Finance Blockchain Platform (贸易金融区块链平台) and Hong Kong’s eTradeConnect platform have completed the first phase of integration and commenced trial operation, according to a joint announcement made on 3 November by the People’s Bank of China’s (PBOC) and Hong Kong Interbank Clearing Limited.
Participants in the trial operation phase include ICBC, Bank of China, Bank of Communications and Standard Chartered.
PBOC’s Trade Finance Blockchain Platform was first launched in September 2018 by the Shenzhen branch of PBOC, in cooperation with PBOC’s Digital Currency Research Institute (央行数字货币研究所) and five local banking-sector financial institutions.
The platform uses blockchain technology to facilitate trade and financing activities including accounts receivable trade financing, while also serving as a trade finance regulatory system that enables authorities to engage in dynamic, real-time monitoring of various financial activities.
Hong Kong’s eTradeConnect is a DLT-based platform that enables customers and their trading partners to engage in trades and trade financing via information sharing. The platform’s initiating banks include ANZ, Bank of China, Bank of East Asia, DBS Bank, Hang Seng Bank, HSBC and Standard Chartered.
In 2019 PBOC’s Shenzhen Fintech Research Institute executed a memorandum of cooperation with eTradeConnect for platform integration, focusing on the trade financing needs of companies and financial institutions in mainland China and Hong Kong.
The goal of cooperation is to “raise the level of trust and convenience of cross-border trade financing, reduce foreign trade financing costs for small and medium-sized companies, and help enterprises to expand abroad.”
The cooperative undertaking will also seek to “pragmatically reduce the existing pain points for trade financing procedures, expedite the expansion of trade financing operations between banks in Hong Kong and mainland China, and further drive the ongoing growth of fintech development.”