BNM and HKMA Forge Closer Ties to Boost Cross-Border Payments, Digital Assets, and Local Currency Use
Bank Negara Malaysia (BNM) and the Hong Kong Monetary Authority (HKMA) have established a significant bilateral agreement aimed at deepening financial and payment cooperation between the two jurisdictions. Signed in early October 2026 in Hong Kong, the pact outlines a multi-faceted approach to strengthen regional financial linkages, focusing on innovation in digital assets, payment system efficiency, and local currency promotion.
Deepening Financial Cooperation
The agreement establishes a dedicated joint policy workstream focused on exploring compliant cross-border stablecoin use cases between Malaysia and Hong Kong. This initiative signals a forward-looking approach to embracing digital currencies within regulated frameworks. Both central banks committed to a robust exchange of policy insights and regulatory best practices concerning tokenisation, digital assets, and the evolving landscape of digital money.
A key outcome is the plan to enhance connectivity between their respective Real Time Gross Settlement (RTGS) systems, a move expected to significantly expedite and streamline cross-border settlements, reducing transaction times and costs. Furthermore, discussions are underway to explore potential links between Hong Kong’s Central Moneymarkets Unit (CMU) and Malaysia’s Real-time Electronic Transfer of Funds and Securities System (RENTAS). This capital market linkage aims to facilitate more efficient cross-border settlement and holding of securities, fostering greater integration in capital markets.
Enhancing Trade and SME Access
A significant objective of this enhanced cooperation is to improve trade finance access for small and medium-sized enterprises (SMEs) across both Malaysia and Hong Kong. Recognizing the vital role SMEs play in economic growth, the central banks will share technical expertise and foster collaboration leveraging digital trade platforms. Hong Kong’s Commercial Data Interchange (CDI) and CargoX are cited as examples of platforms that can be utilized to streamline documentation, enhance transparency, and ultimately simplify access to trade finance for businesses operating across borders.
Promoting Local Currencies and Security
In a move to foster greater financial autonomy and reduce reliance on third-party reserve currencies, BNM and HKMA will jointly promote the broader use of local currencies—the Malaysian Ringgit (MYR) and the Hong Kong Dollar (HKD)—in bilateral trade and investment. This initiative aims to reduce exchange rate risks and transaction costs for businesses engaged in cross-border commerce. Furthermore, recognizing the increasing digitalization of the financial sector, the pact emphasizes cooperation in cybersecurity. The central banks will actively exchange threat intelligence and best practices to safeguard their respective financial systems against cyber threats.
Why it matters
This bilateral agreement is a substantial step forward in integrating Malaysia’s financial infrastructure with one of Asia’s primary financial hubs. The focus on cross-border stablecoins and digital assets highlights BNM’s proactive stance in the rapidly evolving digital finance space, positioning Malaysia to capture opportunities in Web3 and tokenised finance while ensuring regulatory oversight.
For businesses, particularly SMEs, the proposed RTGS linkages and efforts to simplify trade finance using digital platforms could significantly lower the barriers and costs of doing business between Malaysia and Hong Kong. The push for settling trade in local currencies (MYR and HKD) is a strategic move to insulate regional commerce from the volatility of major global currencies. Ultimately, this pact reinforces the broader narrative of strengthening regional payment connectivity, building upon existing frameworks to create a more seamless and resilient financial ecosystem in Asia, similar to the goals outlined in the ongoing developments of national infrastructure.
Internal links: How Malaysia’s Payment System Works · Payment Gateways in Malaysia.
Sources: The Star, The Edge Malaysia, and the Hong Kong Monetary Authority (October 2026).
