Project Inthanon-LionRock with the BOT is entering its second phase, which will have participation from HKEX, 19 banks, and five corporates.
HKMA (Hong Kong Monetary Authority) chief Eddie Yue has announced the launch of phase two of its cross-border CBDC project, as well as a possible future extension of this work to include a ‘multi-CBDC platform’.
“As a leading international financial centre, Hong Kong should always be looking to enhance cross-border banking,” Yue said on Monday (2 November) at Hong Kong Fintech Week.
“The correspondent banking system we have today is far from perfect. In fact, it’s inefficient, costly and opaque.”
Given these issues, the BIS (Bank for International Settlements) has set up a task force to study the use of technology to improve cross-border banking, with the HKMA participating in the initiative.
The HKMA has already been collaborating with the BOT (Bank of Thailand) to explore the potential of a blockchain-based CBDC network, with a view towards more efficient cross-border payments. The project has to date been known as Project Inthanon-LionRock.
“We have already developed a Proof-of-Concept prototype that enables real-time cross-border funds transfers on a peer-to-peer basis,” Yue said. “In the next phase, we are exploring business use cases such as cross-border trade settlement and capital market transactions.”
As part of the project’s second phase, the HKMA and BOT will soon bring banks and large corporates into trials to test the network using actual trade and capital market transactions. So far, participation has been secured from HKEX (Hong Kong Exchanges and Clearing), 19 banks, and five corporates.
The project findings are expected to be delivered in Q1 2021.
Further studies will also be undertaken in future to extend the architecture to a ‘multi-CBDC platform’, which e-wallet service providers may also be able to use to offer remittances and cross-border payments to retail customers.
“We hope this initiative can provide the market with efficient, cost-effective, and transparent cross-border payments services.”