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Hong Kong central bank, BIS exploring blockchain for SME finance

Words by Ledger Insights

Avg. 1 Min read

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The Hong Kong Monetary Authority (HKMA) and the BIS Innovation Hub have launched Project Dynamo, which aims to use DeFi, blockchain and smart contracts to help small and medium enterprises (SMEs) get better funding. They intend to explore the impact on funding costs, and the pool of funds available.

Numerous studies have shown that SMEs are enormously important for economies. A World Bank reports states they make up 90% of companies and account for 50% of employment. It’s widely known that SMEs struggle with funding. The International Finance Corporation (IFC) says there is $5.2 trillion in unmet demand for financing annually. That means the funding provided only addresses just over 40% of what SMEs need.

There are several reasons for this shortfall, but two stand out. The first is a matter of trust. 

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