HSBC and Dutch Bank Performs First Trade Finance Transaction Using Blockchain
HSBC and Dutch bank ING successfully completed the world’s first trade finance transaction using a single blockchain platform, which indicates that the technology is commercially viable for trade finance.
HSBC and Dutch bank ING completed the deal for Cargill last week when a shipment of soybeans was transported from Argentina to Malaysia through the global subsidiaries of commodity traders in Geneva and Singapore, the British lender said in a statement.
The transaction, whose terms have not been disclosed, was completed using Corda’s letter of credit (LC) system, which is being processed from a standard of five to 10 days to 24 hours.
The transaction was an end-to-end exchange between a buyer and seller and their corresponding banks that were completed in a shared digital application rather than multiple systems, according to HSBC. It was the first scalable live trade finance transaction using blockchain, it added.
HSBC said the transaction was executed on a platform called Corda, which was developed by R3, a blockchain consortium based in New York, whose members include more than 100 banks, regulators and trade associations.
“At the moment, buyers and suppliers use a letter of credit, typically concluded by physically transferring paper documents, to underpin transactions,” Vivek Ramachandran, global head of innovation and growth at HSBC’s commercial banking unit told Reuters.
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