Singapore and Hong Kong partnered up to build a blockchain-powered trade network and 20 banks are expected to join the partnership.
The two competitors Singapore and Hong Kong have teamed up after a long time and this global trade connectivity network (GTCN) could give rise to new global standards for the trillion-dollar industry, said two top central bankers from Singapore and Hong Kong at the Singapore Finetech Festival on Thursday.
The bankers revealed that 20 global banks and financial institutions will participate in the blockchain-backed network.
The GTCN is expected to launch in 2019, as stated by the Monetary Authority of Singapore (MAS). The network will act as a platform for impeccable transfer of data and digital documents with its focus on covering global trade flow emerging from the two major trade hubs in Singapore and Hong Kong.
Singapore officially took over the Asean chairmanship in 2018 and will target Asean expectedly, whereas, Hong Kong will take on China.
“Hong Kong has a hinterland called China. Singapore has a hinterland called Asean,” said Bernard Wee, head of MAS’s financial markets development department and payments and technology solutions.
Both of the central banks (from Singapore and Hong Kong) were a part of a three-hour meeting with bankers held in Singapore on Thursday.
Bankers are a bit concerned for privacy regarding their personal data and transaction details, said Li Shu-Pui, executive director of the Hong Kong Monetary Authority. They feel that their secrecy is at a great risk.
Blockchain technology acts as a distributive ledger among multiple regulators, which stores and digitizes trade-finance documents as well as brings substantial savings for the corporate.
Mr. Li believes that as the GTCN progresses, European financial institutions will be drawn towards it too.
Tan Kah Chye, founder of Tin Hill Capital and former vice-chairman of Barclays corporate banking says that the current documentation supporting system due to its paper-based nature takes a long time to trade documents from Singapore to Jakarta.
“Coming from the private sector, most of us want the government to be hands-off. But creating standards is something that we want the government to be hands-on,” said Mr. Tan, who was speaking on the panel at the Finetech Festival.
Mr. Li also highlighted the fact that Hong Kong and Singapore being traditional competitors are sitting ‘together’ on a panel. It seems like Finetech is dissolving the barriers between the two economies.
MAS’s Mr. Wee summed up the situation in a single sentence, “The message is that when you work with one of us, you work with both of us.”