Deloitte announced on March 30 that it has been working with the Hong Kong Monetary Authority (HKMA) and the leading trade finance banks in Hong Kong to develop a distributed ledger technology (DLT) proof of concept for trade finance.

Industry participants include Bank of China (Hong Kong), The Bank of East Asia, Hang Seng Bank, HSBC and Standard Chartered.

The project, focusing on trade finance, has resulted in the design and development of a proof of concept leveraging DLT to create a platform for banks, buyers and sellers, and logistics companies.

Moreover, this proof of concept has demonstrated the application of DLT in digitizing paper-intensive processes through smart contracts, reducing the risk of fraudulent trade and duplicate financing, and improving the transparency and new product innovation of the industry as a whole.

This project has also explored the implications of DLT from the dimension of operations, legal, regulatory, governance and data security.

“The proof of concept result has shown the potential of using distributed ledger technology for trade finance though there are still a number of matters such as legal, regulatory and governance issues which need further consideration,” comments executive director, HKMA, Li Shu-pui.