The Monetary Authority of Singapore (MAS) and the Hong Kong Monetary Authority (HKMA) are working on a trade finance cross-border platform that leverages blockchain technology to reduce potential fraud and errors.

The blockchain project is their first collaborative initiative as part of a newly signed agreement aimed at strengthening cooperation between the two cities and foster fintech development within the region.

The announcement comes as seven banks in Hong Kong have decided to commercialize an HKMA-led, blockchain-based trade finance proof-of-concept into a production system. Called the Hong Kong Trade Finance Platform (HKTFP), the system allows to digitalize and share trade documents, automate processes and reduce risks and fraud.

Under the agreement with MAS, the platform will be linked with a similar platform under construction in Singapore, according to a report by Reuters. More details will be announced next months, the two authorities said.

“This interface is likely to be the first of its kind in the world in the application of distributed ledger technology (DLT) in solving the century-old problem arising from the inefficiency of the paper-based trade finance system,” said HKMA head Norman Chan.

“Technology is a game changer for the future of banking and payment services. It will differentiate winners from losers. I am very pleased to say that Hong Kong has made important progress in cross-border collaboration and the research on DLT applications. The collaborative efforts and enhanced research and talent development are the essential building blocks to facilitate financial innovation.”

The fintech cooperation agreement between Singapore and Hong Kong was exchanged today during the Fintech Day event organized by the HKMA.

As part of the agreement, the two authorities have committed to work on joint fintech projects, facilitate referrals of innovative businesses, share information, and exchange expertise, to facilitate financial innovation in both Singapore and Hong Kong.

Chan said the collaboration between HKMA and MAS “will create significant synergy for the development of fintech and more efficient fund flows between the two markets.”

Other initiatives unveiled at HKMA’s fintech event include plans to develop working guidelines for banks engaging in blockchain technology, as well as the creation of a US$7 million fintech award to reward outstanding startups.

The cooperation with HKMA follows other similar fintech agreements MAS signed last with several overseas financial regulators from the UK, Australia, Switzerland, South Korea, Japan, and France, among others.