Yue: Hong Kong as super connector and fintech innovation hub

Hong Kong's fundamental role as an intermediary for trade, investment, and financial flows between the Chinese Mainland and the rest of the world remains essential.

Since 2014, the HKMA has introduced various Connect Schemes, including Stock Connect, Bond Connect, Swap Connect, and Wealth Management Connect, to deepen financial integration and facilitate cross-boundary capital flows.

These schemes allow international investors to access China opportunities and, increasingly, Chinese investors to invest globally.

Furthermore, the HKMA's multi-currency Real Time Gross Settlement (RTGS) systems have established overseas linkages with local currency RTGS systems in Malaysia, Indonesia, and Thailand.

The Central Moneymarkets Unit (CMU), Hong Kong's central securities depository, has also developed links with regional and international CSDs like Euroclear and Clearstream, with plans for further internationalization and modernization.

A Digital Asset Platform will be developed later this year to support digital bond issuance and settlement, expanding the CMU's international reach for efficient asset portfolio management.

In retail payments, Hong Kong established a linkage between its Faster Payment System (FPS) and Thailand's PromptPay in 2023 for cross-border QR merchant payments, followed by Payment Connect with the Chinese Mainland's Internet Banking Payment System last June.

Progress has also been made in adopting ISO 20022 messaging standards to enhance data interoperability, aligning with G20 targets for faster, cheaper, more transparent, and accessible cross-border payments.

Beyond improving existing financial infrastructures, Hong Kong is actively experimenting with alternative ways and new technologies to meet evolving market needs, fostering innovation.

In November last year, the HKMA unveiled its "Fintech 2030" strategy, aiming to establish Hong Kong as a robust, resilient, and future-ready fintech hub.

This comprehensive strategy encompasses over 40 initiatives across four key pillars: Data and Payment, AI, Resilience, and Tokenisation.

A particular focus is placed on tokenisation, recognized for its clear benefits in wholesale and cross-border transactions due to its potential to drive greater efficiency, lower costs, and improve transparency.

Two years ago, the HKMA launched Project Ensemble to support the development of a tokenisation ecosystem.

This initiative officially entered a pilot phase, EnsembleTX, last November, enabling market participants to engage in real-value transactions involving tokenised deposits and digital assets, and facilitating real-time management of liquidity and investment needs.

The HKMA plans to continue deepening and scaling up this ecosystem by onboarding more banks, incubating new use cases, and driving broader adoption.

These efforts align with global trends, including Swift's development of a blockchain-based shared ledger to enable interoperability between banks' tokenised deposits, which will facilitate 24/7 cross-border payments and reduce fragmentation in the emerging tokenised economy.

The HKMA emphasizes responsible innovation, guided by effective regulation and proper guardrails, as exemplified by Hong Kong's stablecoin issuer regime, which adheres to the principle of "same activity, same risks, same regulation" and aligns with international standards to ensure financial system integrity and stability.