A new strategy shows that the Hong Kong Monetary Authority (HKMA) plans to guide local banks to fully adopt fintech technology. The central banking institution in the region also emphasized that it will “do what it says” by digitizing its own supervision of financial institutions.
Hong Kong Central Bank supports the development of financial technology
Hong Kong’s monetary policy regulator has proposed a new strategy to stimulate the development of financial technology in the Special Administrative Region of China. According to this strategy, the HKMA’s goal is to fully adopt new financial technologies in the next four years. The central bank also hopes to “promote the provision of fair and effective financial services for the benefit of Hong Kong citizens and the economy.”
In a seminar organized by the Hong Kong Association of Banks, the Chief Executive Officer of the Hong Kong Monetary Authority Yu Chengdong outlined the five key areas of “FinTech 2025”. The regulator hopes to encourage all banks to adopt fintech, build a future-oriented Hong Kong for CBDC, create a next-generation data infrastructure, expand a workforce proficient in fintech, and cultivate an ecosystem through funding and policies.
One of the key directions in which the monetary authorities intend to step up their efforts is the full digitization of banking operations. On the basis of the smart banking era strategy announced in 2017, the HKMA will continue to “promote the full adoption of financial technology by Hong Kong banks.” Regulators will identify specific fintech areas that the industry lags behind and needs support. This also applies to its own regulatory framework:
The HKMA will issue further regulatory guidelines to promote the adoption of new technologies, and continue to “consist words with deeds” to digitize its supervision of banks through the use of advanced technologies.
The HKMA cooperates with stakeholders to implement the “FinTech 2025” strategy
The new strategy envisages strengthening and expanding the city’s existing data infrastructure. The Hong Kong Monetary Authority is planning to establish a credit data sharing platform based on distributed ledger technology (DLT) and establish a commercial data exchange.
The central bank will strive to increase the availability of financial technology talents through new training programs and cooperation between industry and academia. One such initiative is the Industry Project Masters Network, which provides internship opportunities for graduate students to join participating banks’ financial technology projects. The program was launched in September.
The HKMA stated that it will work with industry players to establish a new fintech inter-agency coordination group responsible for formulating support policies for the fintech ecosystem. The monetary authority will strengthen its fintech regulatory sandbox and cooperate with the region’s Innovation and Technology Commission to provide funding for qualified fintech projects. The Chief Executive Officer of the Monetary Authority Yu Dehua emphasized:
Fintech is undoubtedly an important growth engine for the financial industry in the post-epidemic era, and now is a good time to redouble our efforts to seize opportunities. “FinTech 2025” clarifies our vision in this regard. I urge all stakeholders to join hands with the HKMA.
The financial regulator intends to invest some efforts to improve Hong Kong’s preparations for the central bank’s digital currency issuance. The HKMA refers not only to the development of wholesale CBDC, but also to the research of retail digital currencies. The financial institution will continue to support the People’s Bank of China in testing the digital renminbi (e-CNY) for cross-border payments, while also conducting separate research on the digital Hong Kong dollar (e-HKD).
Do you expect Hong Kong to become a global financial technology center? Let us know in the comments section below.
Image Source: Shutterstock, Pixabay, Wikimedia Commons