eddie yue : connecting the digital islands - next steps in trade finance opening remarks by mr eddie yue, chief executive of the hong kong monetary authority, at the roundtable on “ the future of trade finance : opportunities for hong kong, asia and the world ”, co - organised by the university of hong kong ( hku ) asia global institute & international chamber of commerce, hong kong, 26 january 2022. * * * 1. good afternoon everyone. thank you, dr fung, for inviting me to speak, and the hkma is very pleased to support today ’ s event. it would have been a pleasure to meet you all in person, but i am thankful that this event could go ahead as planned. 2. today ’ s topic is the future of trade finance, and i believe we all agree that, to elevate global trade finance to the next level, the recurring pain points of the existing trade finance system need to be fixed. the issues — including a paper - based system that is inefficient, prone to fraud and human error — have been discussed many times ; so i believe by now, we all have a basic understanding of the problems. indeed, various stakeholders, including the hkma, have been attempting to solve the pain points by using emerging technologies. 3. for example, in 2018, the hkma facilitated the launch of etradeconnect, which is a blockchain - based platform that aims to digitise paper based documents and automate the trade finance process. the platform was subsequently connected to a similar platform built by the people ’ s bank of china to facilitate cross - boundary trade finance processes. 4. similar platforms have proliferated around the world, but the trade finance gulf continues to widen. according to the asian development bank, about 10 % of global trade suffer from the trade financing gap. 1 to put this into perspective, the value of the gap amounted to usd $ 1. 7 trillion in 2020, marking a 15 % increase from just two years before. smes, in particular, accounted for an alarming 40 % of rejected trade finance requests. these figures illustrated that global efforts are nowhere near enough, and we should all rethink why the gap is continuing to widen, and how to make our efforts as effective as possible. 5. a recent report published with the support of fung business intelligence suggested a possible reason : the various digital trade finance platforms mostly work independently and do not synergise

s own financial system. similarly, hong kong is a trusted partner for international investors. we offer them access to mainland markets in the language and rules with which they are familiar. in doing so we help maximize their opportunities while minimising their compliance costs and risks. one exciting aspect of the connect schemes is the prospect of unleashing the potential of hong kong as the world ’ s leading offshore renminbi business hub. the internationalization of the renminbi and the opening of china ’ s capital account are interdependent issues. today ’ s seminar will focus on hong kong ’ s role in driving offshore rmb business, and the opportunities that come with it. i would simply like to stress the point that hong kong has the infrastructure, the expertise, and the markets to perform that role. before i conclude, let me mention two other opportunities hong kong cannot afford to miss : green finance and technology. we intend to be at the forefront of these two trends that will define the future of finance. we are joining hands with local and international financial regulators to ensure that the financial sector plays its part in achieving global net - zero objectives. we are working with the banks to manage their own climate risk as they help the real sector go green. in particular, in developing our financial ecosystem, we are helping the financial sector fill the capacity gap in knowledge, talent and data. we are also taking steps to create a more supportive platform to enable green and sustainable finance to take off, not just in hong kong but also on the mainland and in the region as a whole. in terms of technology, we have laid solid foundations that have already made virtual banking and faster payments a part of daily life. we are now accelerating the digital transformation by encouraging all banks to harness the power of data to promote financial efficiency and inclusion. we are pioneering research and pilot schemes in domestic and cross - border central - bank digital currencies. we are very pleased that the pboc is our close partner in the m - cbdc bridge project and the technical trials for cross - boundary use of e - cny. conclusion there is much more to say about these exciting topics, and i have no doubt that much more will be said during this afternoon ’ s seminar. i began with the question of whether hong kong has the attributes of an ifc. my answer is a clear and resounding “ yes ”. yes, because of what we have achieved collectively through building our ecosystem and our resilience