The financial watchdog of Hong Kong has joined forces with several banks to launch a trade finance platform using blockchain technology.

Hong Kong’s banking regulator, HKMA, and seven banks, including HSBC and Standard Chartered, said they will jointly launch a trade finance platform in September using blockchain technology.

The blockchain project, which was first announced in March 2017, is aimed at digitising documents and automating processes to reduce risk and increase the financing capability of the banking industry.The other banks involved in the Hong Kong initiative are BOC Hong Kong, Hang Seng Bank, Bank of East Asia, Australia and New Zealand Banking Group and Singapore’s DBS Group, the institutions said in a statement.

Put simply, a blockchain is a distributed digital ledger kept on a network comprising thousands of powerful computers. There are hundreds of variations of blockchain technology, with each performing different functions. Transactions stored on a blockchain are indelible, and advanced cryptography is said to offer a high level of security.

“The next major milestone ... is to link up with other trade platforms in other jurisdictions to further facilitate cross-border trades,” said Howard Lee, deputy chief executive of the HKMA.

The plans for the platform are part of a global quest to use the distributed ledger technology that underpins digital currencies such as bitcoin within the world of banking, and more so wealth management. In April, this publication reported that UK-based bank Barclays has said that blockchain is “a solution still seeking a problem”.

In May, HSBC and ING Groep NV said that they performed the world’s first trade finance transaction using a single blockchain platform. The platform, Corda, was developed by New York-based blockchain consortium R3.