This week the Asian giant HSBC has completed the first Yuan-denominated letter of credit transaction via Voltron blockchain platform. Voltron, a company that uses blockchain technology to reduce the time it takes to execute the entire process of paper-based Letters of Credit, is aiming to disrupt the financial and commercial industry with its services.
HSBC has used Voltron’s chain of blocks to process a transaction in Chinese Renminbis between MTC Electronics (in Hong Kong) and another company in Europe. By not using Voltron’s facilities, the settlements of those Letters of Credit could last 5 or even 10 days. However, by using the latest blockchain technology, the LOF is processed within 24h, reducing costs and avoiding inefficiencies.
Ajay Sharma, Head of Global trade of HSBC, affirmed:
“Clearly we are hoping that through this technology, the unit cost of doing a transaction comes down, along with other benefits, such as speed. The use of blockchain has a transformative impact on trade finance transactions and enables greater transparency and enhanced security in addition to making it simpler and faster. The overall efficiency it brings to trade finance ensures cost-effectiveness, quicker turnaround and potentially unlocks liquidity for businesses”
Those new bankers commercial credit could transform international trade as we know it. In fact, this first full test is a green light for major banks to use the service. For the ones that are not aware, the Voltron platform was initially developed by eight of the biggest banks in the world (BNP Paribas, CTBC Bank, ING of France, Standard Chartered, and HSBC, Natwest, SEB and Bangkok Bank).
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