The Hong Kong Monetary Authority (HKMA) is discussing with the nation’s central bank widening cross-border banking data sharing in a bid to expedite loan approvals for enterprises.
Alan Au Yuk-lun, the HKMA’s executive director for banking conduct, made the remarks on Friday at a forum focusing on the digital economy held by local think tank One Country Two Systems Research Institute.
About 40,000 active Hong Kong-owned enterprises in Shenzhen require financing from mainland banks, while a similar number of mainland-related personal loan applications are processed by Hong Kong banks annually, he said. “This demand is expected to grow over time.”
READ MORE: Hong Kong is playing a key role in digital yuan’s deployment
Au said the HKMA has signed a memorandum of understanding with the country’s central bank, the People’s Bank of China (PBOC), to launch a pilot program of credit-data sharing in Hong Kong and Shenzhen.
Au said that mainland enterprises establishing operations in Hong Kong require financing from both sides of the border and need their respective mainland credit histories to be accessible to Hong Kong lenders.
“If cross-border credit information sharing can be achieved,” Au said. “Banks will be able to properly manage credit risks with clearer understanding of their clients’ situations. At the same time, businesses and individuals can obtain loans at lower costs with faster application processing.”
Apart from credit information sharing, the HKMA is exploring potential integration between Hong Kong’s Faster Payment System and the mainland’s online payment platforms to streamline cross-border trade settlements.
At the same event, Ceajer Chan Ka-keung, chairman of Welab Bank and the special administrative region’s former secretary for financial services and the Treasury, said that Hong Kong is exploring stablecoins as a potential solution to inefficiencies in cross-border payments and settlements.
READ MORE: HKMA inks deal with PBOC to enhance Faster Payment System
He said current international bank transfers face significant delays and processing costs due to centralized systems requiring multiple intermediaries for verification, and stablecoins could help alleviate these inefficiencies.
