Hong Kong's Financial Secretary Discusses Future of AI and Tokenisation

The Financial Secretary of Hong Kong, Mr. Paul Chan, addressed the audience at the Hong Kong FinTech Week x StartmeupHK 2026 on November 2nd, emphasizing the transformative powers of artificial intelligence (AI) and tokenisation in the financial landscape.

Hong Kong's Leadership in Fintech

During his speech, Mr. Chan acknowledged Hong Kong's historical role as a fintech leader, underlining the necessity for the city to harness its technological capabilities to create tangible economic advantages. As the fintech sector evolves, several pivotal questions arise:

• How can we enhance connectivity among payment systems?
• What strategies can we implement to increase scale and liquidity for tokenised assets?
• As AI takes on more financial responsibilities, how do we delineate accountability?

According to Mr. Chan, the answers to these questions will significantly influence Hong Kong's future in the fintech domain. He outlined the government's commitment to integrating fintech as part of the recently unveiled National 15th Five-Year Plan.

Efficiency as a Driving Force

Focusing on efficiency, Mr. Chan noted that significant advancements are emerging from unifying financial systems rather than merely enhancing the speed of individual services. He cited a World Bank survey revealing that the average cost of sending 200 US dollars through digital remittance channels is about 4.6%, compared to 7.3% for non-digital services, largely due to infrastructural challenges.

In Hong Kong, the Faster Payment System (FPS) exemplifies efficient infrastructure, boasting over 22 million registrations in a city of 7.5 million. With an average of HKD 16.2 billion in daily payments, the FPS is already establishing connections with the Mainland and Thailand. A new partnership with UnionPay International will facilitate QR-code payments at over 100 million merchants across various markets.

Moreover, Hong Kong became a frontrunner in the realm of capital markets by issuing its first tokenised government green bond in 2023, achieving a settlement time of just one business day. This was followed by another digital green bond offering that raised approximately HKD 20 billion across multiple currencies.

Fostering Inclusion

While efficiency is crucial, Mr. Chan stressed the importance of inclusion. He highlighted the challenges faced by small and medium-sized enterprises (SMEs) in securing financing, particularly those without traditional collateral. A recent survey from the Asian Development Bank noted an unmet demand of US$2.5 trillion for trade finance worldwide.

To tackle this, Hong Kong launched the Commercial Data Interchange (CDI) in 2022, which has already facilitated around 125,000 SME loan applications totaling nearly HKD 110 billion. Data-driven lending approaches have enabled banks to offer lower rates by improving their assessment capabilities.

Additionally, in partnership with CargoX, banks can now utilize trade data to validate transactions effectively. This collaborative effort has already assisted in approving HKD 180 million in trade finance loans.

Building Trust for Sustainable Growth

Establishing trust is fundamental for both efficiency and inclusion. Mr. Chan emphasized that sound regulatory frameworks support this trust by keeping pace with technological advancements. For example, the Securities and Futures Commission (SFC) has licensed two issuers of stablecoins, focusing on sound risk management and compliance.

Looking ahead, the Hong Kong Monetary Authority (HKMA) has introduced Project SAGE, aimed at exploring AI applications in finance while ensuring governance and control. The success of this project hinges on clear delineations of responsibilities within institutions employing AI technologies.

As Mr. Chan articulated, while AI may perform various tasks, ultimate accountability lies with the financial institutions utilizing these technologies. Upholding this principle is crucial for reinforcing trust in AI's role within the financial services sector.

A Vision for the Future

Mr. Chan concluded his remarks by envisioning a future where a small business in Hong Kong can seamlessly utilize the FPS for payments, leverage trade data for financing, and efficiently transact with overseas suppliers—all within a single day. This vision underscores the potential of fintech to enhance everyday business operations, transforming theoretical concepts into practical solutions.

The government is committed to establishing a robust regulatory environment and reliable infrastructure to support this mission. Mr. Chan invited stakeholders to collaborate in realizing this vision, emphasizing that together, innovation can be a powerful tool for the economic empowerment of businesses and individuals alike.