Bankbazaar Singapore – 21, December 2017
The central banks of Singapore and Hong Kong plan to join hands for a trade network powered by blockchain that will see participation of about 20 international banks, reports Business Times. Expected to be in effect by 2019, the one-of-a-kind global trade connectivity network (GTCN) could potentially strengthen the two cities’ status as financial hubs.
Blockchain, a technology that’s rapidly becoming popular for its potential uses in various industries, is expected to speed up the international trade process. Speaking recently to FT, Ramesh Gopinath, VP of blockchain solutions at IBM, had suggested that global trade requires more secure, efficient, and faster technology for document approvals than what is currently in place, and blockchain could be the answer to that.
The Singapore-Hong Kong network will be the first initiative from the two Asian cities to partner in quite a while. It may act as a catalyst for improving global financial standards. GTCN could facilitate the movement of data and documents on trade activities that go through the two cities.
The technology works with a distributed ledger that regulators and financial institutions can access to digitise documentation and ease the process. This could significantly reduce costs for the industry as a whole. At present, trade documentation is mostly paper-based and slow. The documentation work of a shipment that would arrive at its destination overnight currently takes up to a week to be delivered.
Hong Kong might focus on trade movements from China while Singapore could target ASEAN. Incidentally, Singapore is in line for ASEAN chairmanship in 2018. The two central banks involved are aware that a partnership between them alone is not sufficient to bring about a global change but feel a successful implementation in Asia could encourage their European counterparts to jump on the bandwagon.
However, despite the massive benefits that such a plan is expected to bring in, there are several fears that linger. Security of transacted data is the primary concern with experts stressing on the importance of maintaining the secrecy of trade data. Ironing out such wrinkles essentially requires new rules and regulations that can effectively monitor the use of blockchain.