Hong Kong’s central bank is set to test out a new blockchain based trading platform. This platform is linked to 21 different banks including HSBC and Standard Chartered. Although the country has a lot of blockchain based, bank-led trading platforms, this is the largest and one of the earliest ones that is government backed.
Jessica Tan, the deputy chief executive of the Ping An Group said,
Instead of individual banks trying to do this you have the regulator trying to bring the banks together.
The goal of the central bank backed blockchain trade platform is to reduce the time and paperwork required in the other exchanges. It is also hoped to make the verification process more efficient and speed up the credential verification process as well.
The 21 banks that have partnered with the Central Bank will own the platform. Tan also mentioned that the blockchain based system is meant to help smaller companies get better access to supply-chain finance and trade. Because of the significant time required to sign up clients, small companies are often denied a lot of banking services. A blockchain based system helps solve that issue.
Tan’s company believes that they can get company information at a lower cost, therefore enabling small businesses into this sphere. Further, a blockchain based trade system will make fraud detection easier.
By reducing the paperwork, documentation, security issues and human labor required to process transactions, blockchain enabled trade finance will help save a lot of time, money and effort. This technology can also reduce the time that transactions take. For example, if a transaction takes two weeks, with this technology it can be reduced to just a day.
This clearly explains why every bank is looking to integrate this technology in their systems. According to a business insider report, while most banks are seeking the cost and time savings from this technology, they also want to benefit from potentially creating a new business model with this technology.
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