Hong Kong to explore boosting tokenised gold trading in city
Authorities are looking into boosting tokenised gold trading in Hong Kong as a step forward to becoming the world’s first such settlement centre and shielding the city against US-dollar dominance amid rising geopolitics, the Post has learned.
Sources said Chief Executive John Lee Ka-chiu was expected to enhance efforts to build up Hong Kong into an international gold trading centre in his policy address on Wednesday, his second-last blueprint for his incumbent term.
“His policy advisers have proposed to Lee to set out a policy to facilitate tokenised gold trading in Hong Kong so as to turn the city into the first such digital settlement centre in the world. Lee is positive about it,” an insider said.
“The move will boost gold trading in Asia and bypass the Western-dominated international payment settlement system amid the rising geopolitics, while we will still maintain a high standard of transaction monitoring and anti-money laundering measures.”
The source said the digital gold trading would help Hong Kong stave off Western sanctions such as a SWIFT ban on Russian banks due to the Russian-Ukraine war. The ban excluded several major Russian banks from the SWIFT global financial messaging network, aiming to disrupt the country’s ability to conduct international financial transactions.
He said the enhancement of tokenised gold trading would further consolidate Hong Kong’s status as an international financial centre as it would lower the investment barrier and further boost liquidity.
He highlighted the current inadequacies of gold trading in Hong Kong, citing digital gold available from one commercial bank did not permit the redemption of the physical precious metal.
Lee last year said Hong Kong must move quickly to regain a strong position as an international gold trading centre, which can be a “game-changer” for the economy as competition heats up in the region following Singapore’s opening of a depository.
This followed his policy address last year to expand the city’s gold trading market internationally to bolster Hong Kong’s status as a global financial hub, one of three core areas mandated by Beijing, alongside maritime and trade.
He emphasised Hong Kong needed to take action to build up its gold and commodity trading market which currently had “a low base”.
In August last year, private metals company Silver Bullion unveiled a six-storey vault occupying 16,700 square metres (180,000 sq ft) near Singapore’s Changi Airport. The vault is designed to store up to 10,000 tonnes of silver and 500 tonnes of gold.
The Airport Authority has opened a site for new storage facilities for gold in addition to the existing one, expanding the capacity of its vault from 150 to 1,000 tonnes.
Lee also said last year the government would promote the development of world-class gold storage facilities, facilitating the storage and delivery of spot gold by users and investors in Hong Kong and driving demand for related services such as collateral and loan businesses, opening up new growth areas of the financial sector.
The precious metal became a much sought-after commodity in the past 12 months, with prices soaring more than 40 per cent, according to the World Gold Council.