The Hong Kong Monetary Authority (HKMA) and the Bank of Thailand (BOT) have signed an agreement to jointly develop a digital currency for cross-border trade. Blockchain technology and the depository receipt corridor network will be leveraged to support a cross-border payment platform developed by the HKMA.
Companies in both Thai and Hong Kong markets can settle wholesale payments with one another directly on the blockchain-based cross-border payment platform. The platform will prevent payment delays, since it, unlike conventional methods, does not require multiple intermediaries.
The HKMA will issue a two-tier digital token to Hong Kong banks participating in the pilot program dubbed Project KionRock-Inthanon. Another token will be issued to banks to distribute to their corporate customers settling wholesale payments with other companies or banks.
In researching and developing the project, HKMA is collaborating with giant multinational bank HSBC and ZhongAn Technologies. In Thailand, the BOT is also working with HSBC as well as Standard Chartered and local banks such as Kasikorn Bank and Krungthai Bank. More details on a proof of concept of the project are expected to come out in the first quarter of 2020.
In November 2019, the HKMA signed a Memorandum of Understanding with a subsidiary of the People’s Bank of China to develop a platform that connects HKMA’s eTradeConnect with a trade finance platform of China’s central bank.
According to the central bank’s press release, the connection “will provide firms in both places with more convenient trade finance services and enable banks in Hong Kong to expedite the expansion of their trade finance business.”
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