Hong Kong and UAE Central Banks Forge CBDC Collaboration, Redefining Cross-Border Trade, and Embracing Innovation.
The central banks of Hong Kong and the United Arab Emirates (UAE) have united their efforts to strengthen financial cooperation and collaborate on regulating virtual assets. They aim to enhance regulatory frameworks and promote the development of financial technology (fintech) in a joint initiative.
In Abu Dhabi, a bilateral meeting has been hosted to discuss financial infrastructure and cross-border trade settlements, fostering cooperation between the central banks of Hong Kong and the UAE.
Hong Kong-based crypto custodian, Hex Trust, has recently obtained a license from the UAE’s Securities and Commodities Authority, becoming one of the pioneering firms to receive such approval. This follows the UAE’s decision to permit crypto companies to apply for operating licenses.
Finoverse, a fintech and Web3 platform with offices in Hong Kong and Dubai, foresees increased collaboration between the two regions in blockchain technology.
The emphasis placed by the two central banks on cross-border trade settlements could facilitate the utilization of central bank digital currencies (CBDCs), offering advantages such as faster transfers, reduced costs, and potentially reduced dependence on the U.S. Dollar.
The Central Bank of the UAE is intensifying its plans for the development of a digital dirham, with the initial phase of the CBDC strategy projected to be completed within a year.
The UAE and Hong Kong are collaborating on mBridge, a blockchain platform that enables multiple CBDCs and addresses limitations in cross-border payment systems. The successful trial of this platform includes real corporate transactions, demonstrating the potential of this technology.
Cryptocurrency exchanges such as CoinEx, Huobi, and OKX have submitted applications for dedicated crypto trading services in Hong Kong, following the application process initiated by the Securities and Futures Commission (SFC).
The collaboration between the central banks of Hong Kong and the UAE, combined with their efforts in fintech development, virtual asset regulation, and exploration of CBDCs, exemplifies their progressive approach towards enhancing financial cooperation and embracing innovative technologies.