The Hong Kong Monetary Authority (HKMA) has released a sobering assessment of blockchains — the much-hyped technology that some banks are researching to cut costs — including a warning that it could increase the risk of money laundering.
The anonymity afforded by some distributed ledger platforms could facilitate illicit activities, such as the trafficking of criminal gains, the sale of illegal products and ransom payments, the HKMA said in a study released yesterday on the technology.
While the report highlighted a blockchain’s cost and time-saving qualities, the technology predicated on a shared network of transaction records also offered legal, risk management and regulatory issues, it said.
Distributed ledger technology offers “good potential, but a lot of things need to be addressed,” Shu Pui Li (李樹培), the central bank’s executive director for financial infrastructure, said as part of a presentation for the HKMA Fintech Day. “The most painful issue is legal. A lot of legal issues.”
The study throws a cautionary light on a technology that banks around the world are researching for use in areas such as trade finance and mortgages, as they try to trim expenses and boost profitability.
A blockchain could reduce banks’ infrastructure costs worldwide by US$15 billion to US$20 billion per year by 2022, law firm White & Case said.
More than 70 global financial firms are affiliated with a consortium led by R3CEV LLC, which is developing blockchain applications for use in financial services.
Two of its members, Bank of America Corp and HSBC Holdings PLC, are working with the Singaporean government on a distributed ledger that enables paperless letters of credit for trade finance.
Bank of China Hong Kong (Holdings) Ltd (中銀香港控股), the city’s largest mortgage lender, is working with the Hong Kong government’s Applied Science and Technology Research Institute on a blockchain for use in property valuation. The application, which was highlighted in a presentation at HKMA Fintech Day, is due to be rolled out by the end of the year.
Globally, Greenwich Associates estimated that the annual budget for blockchain initiatives hit US$1 billion this year.
It was too early to make any definite conclusions about distributed ledgers, and the HKMA is aiming to produce a second report with more in-depth analysis, Li said.
“Be prudent, don’t get too excited,” he said.
PERSISTENT RUMORS: Nvidia’s CEO said the firm is not in talks to sell AI chips to China, but he would welcome a change in US policy barring the activity Nvidia Corp CEO Jensen Huang (黃仁勳) said his company is not in discussions to sell its Blackwell artificial intelligence (AI) chips to Chinese firms, waving off speculation it is trying to engineer a return to the world’s largest semiconductor market. Huang, who arrived in Taiwan yesterday ahead of meetings with longtime partner Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), took the opportunity to clarify recent comments about the US-China AI race. The Nvidia head caused a stir in an interview this week with the Financial Times, in which he was quoted as saying “China will win” the AI race. Huang yesterday said
Nissan Motor Co has agreed to sell its global headquarters in Yokohama for ￥97 billion (US$630 million) to a group sponsored by Taiwanese autoparts maker Minth Group (敏實集團), as the struggling automaker seeks to shore up its financial position. The acquisition is led by a special purchase company managed by KJR Management Ltd, a Japanese real-estate unit of private equity giant KKR & Co, people familiar with the matter said. KJR said it would act as asset manager together with Mizuho Real Estate Management Co. Nissan is undergoing a broad cost-cutting campaign by eliminating jobs and shuttering plants as it grapples
The Chinese government has issued guidance requiring new data center projects that have received any state funds to only use domestically made artificial intelligence (AI) chips, two sources familiar with the matter told Reuters. In recent weeks, Chinese regulatory authorities have ordered such data centers that are less than 30 percent complete to remove all installed foreign chips, or cancel plans to purchase them, while projects in a more advanced stage would be decided on a case-by-case basis, the sources said. The move could represent one of China’s most aggressive steps yet to eliminate foreign technology from its critical infrastructure amid a
MORE WEIGHT: The national weighting was raised in one index while holding steady in two others, while several companies rose or fell in prominence MSCI Inc, a global index provider, has raised Taiwan’s weighting in one of its major indices and left the country’s weighting unchanged in two other indices after a regular index review. In a statement released on Thursday, MSCI said it has upgraded Taiwan’s weighting in the MSCI All-Country World Index by 0.02 percentage points to 2.25 percent, while maintaining the weighting in the MSCI Emerging Markets Index, the most closely watched by foreign institutional investors, at 20.46 percent. Additionally, the index provider has left Taiwan’s weighting in the MSCI All-Country Asia ex-Japan Index unchanged at 23.15 percent. The latest index adjustments are to
RSS