The Hong Kong Monetary Authority (HKMA) and the Bank of Thailand (BOT) have signed a Memorandum of Understanding (MoU) to collaborate on Fintech innovation between the two regulatory authorities.
The MoU was signed between Norman Chan, Chief Executive of the HKMA, and Veerathai Santiprabhob, Governor of BOT, in Basel.
According to a release from the HKMA, the two regulators expect to collaborate on the referral of Finntech businesses, information and experience sharing, and joint innovation projects.
One possible project of note is the issuance of Central Bank Digital Currencies (CBDCs). Earlier this month, the BOT published an update on the status of Project lnthanon, an initiative to develop a prototype CBDC in partnership with R3 and Wipro (NYSE: WIT). The BOT has successfully partnered with eight commercial banks on decentralized interbank settlements or “real-time gross settlement.” Further applications will be explored going forward.
The HKMA has initiated its own CBDC initiative entitled Project LionRock in collaboration with the three note-issuing banks in Hong Kong, the Hong Kong Interbank Clearing Limited and the R3 consortium.
The study aims to better understand the feasibility, implications, benefits, and challenges of implementing a CBDC on a Distributed Ledger Technology (DLT) platform through exploring its use in domestic inter-bank payments, corporate payments at a wholesale level, and delivery-versus-payment of debt securities settlement.
The two regulators said a joint CBDC research project is under consideration by the two authorities.
Chan said the HKMA and BOT are longtime partners in financial initiatives and he was pleased to sign the Fintech MoU to take the collaboration to the next level.
“The signing of this MoU not only demonstrates our mutual interests in developing collaborative Fintech initiatives, but also underlines our on-going efforts in cross-border collaboration between central banks in promoting innovation and enhancing experience sharing,” said Chan. “The HKMA looks forward to working together with BOT and seeing the positive outcome from our joint effort.”
Santiprabhob concurred with Chan calling the MoU a significant step in the Fintech collaboration between the two agencies.
“The synergies from our collaboration will lead to productive outcomes that will benefit us all. I believe there is huge potential to enhance quality of financial services by leveraging on technological advancement, and it is our responsibilities as regulators to create an ecosystem that is conducive to innovations,” stated Santiprabhob. “The BOT looks forward to working closely with the HKMA in turning great ideas into innovative practical solutions that will ultimately improve people’s lives.”
Hong Kong has established its jurisdiction as a global Fintech hub via strong government support leveraging a well developed financial services industry. Thailand has pursued financial innovation via solid support from policymakers.