The Bank of Thailand and the Hong Kong Monetary Authority (HKMA) jointly announced Monday the establishment of a cross border payment-versus-payment (PvP) link between the two places. The link will be launched in the second half of 2014 between the Thai baht real time gross settlement system in Thailand and the U.S. Dollar Real Time Gross Settlement system in Hong Kong. This will be the third cross-border PvP link between two real time gross settlement systems for two different currencies in the Asian region. This PvP link will eliminate the principal risk of a foreign exchange (FX) transaction whereby a market player has delivered the currency it has sold but does not receive the currency it has bought. The establishment of this PvP link will increase the efficiency and safety of the FX settlement between the U.S. dollar in Hong Kong and the Thai baht in Thailand. As the U.S. dollar versus the Thai baht transactions account for about 85 percent of Thailand\'s FX transaction in 2012, banks in Thailand can benefit from the reduction in settlement risk and increase in efficiency in executing the settlement of FX transactions. Deputy Chief Executive of the HKMA Peter Pang said the link promotes safer and more efficient payment flows, and eliminates the settlement risk of FX transactions, which involve the delivery of different currencies in different time zones. \"I am glad that the Bank of Thailand and the HKMA share the same view on a closer cooperation of central banks for developing a robust financial infrastructure with the aim of promoting monetary and financial stability in the region,\" he said.