Banking giant HSBC has carried out a blockchain-based letter of credit transaction denominated in Chinese yuan, Reuters reports.
The letter of credit involved Hong Kong-based MTC Electronics exporting a shipment of LCD parts and panels to its parent company, Shenzhen MTC, across the border. The transaction was reportedly done in 24 hours, a fraction of the five to 10 days it traditionally needs to be completed.
This is the first transaction of its kind, Reuters says, and it marks a big leap forward for the blockchain-fueled Voltron trade finance platform that HSBC, Stan Chart, and six other banks have developed.
So far, Voltron has only been used for individual pilot cases, but a full commercial roll-out seems to be forthcoming. Ajay Sharma, HSBC’s regional head of global trade and receivables finance for Asia-Pacific, says that bank hopes to have “something by end of the year, maybe the first quarter of next year.” At which point, they’ll have learned what Voltron costs and if banks “sitting on the sidelines” would find it attractive.
“Clearly we are hoping that through this technology, the unit cost of doing a transaction comes down, along with other benefits, such as speed.”
Photo: Baycrest
