Hong Kong Monetary Authority (HKMA), the city's de facto central bank, is planning to work with regulators in Abu Dhabi to develop a cross-border trade finance system that is built with distributed ledger technology (DLT).

The HKMA signed a fintech co-operation agreement on Tuesday with the Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market, which supervises the financial market of the U.A.E.'s capital.

The HKMA said under the co-operation agreement, it will collaborate with the FSRA to develop innovative financial technology projects, with a specific interest focusing on DLT utilization in international trade finance.

Nelson Chow, chief fintech officer of the HKMA said in the announcement:

"We are particularly pleased to start a dialogue with FSRA on the opportunity to build a cross-border trade finance network using distributed ledger technology."

Though the HKMA has not offered details on what platform the potential pilot may be built on, the initial plan comes at a time when the HKMA has already started similar works with its counterpart in Singapore.

As previously reported by CoinDesk, the HKMA and the Monetary Authority of Singapore (MAS) have started testing a Hong Kong Trade Finance Platform (HKTFP),  an HKMA-led and DLT-based trade finance proof-of-concept since last year.

The report said at the time that over 20 global banks and financial institutions joined the test in an effort to advance the proof-of-concept to commercial production, which was expected to be ready by early 2019.

Hong Kong image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.