Hong Kong & Shanghai Banking Corporation (HSBC) successfully processed their first Yuan-denominated Blockchain based Letter of Credit (LoC) transaction. HSBC has been continually trying to switch to digital ledger technology through Blockchain to revise the traditional methods of paper centric trade in the field of trade financing. As a first such transaction using Chinese currency, this deal has marked the advanced usage of Voltron trade finance platform. Voltron is developed by eight banks including BNP Paribas, Standard Chartered and HSBC.
This mode of transaction was restricted to individual pilot cases so far. Ajay Sharma, HSBC’s regional head of global trade and receivables finance for Asia-Pacific region said, “We are hoping that we will have something by the end of the year, maybe the first quarter of next year, where will we know from Voltron what it costs, at which point, a lot of banks who might be sitting on the side-lines will be able to make a decision.”
“Clearly we are hoping that through this technology, the unit cost of doing a transaction comes down, along with other benefits such as speed.”
Ths remarkable deal involved Hong Kong based MTC Electronic exporting a shipment to its parent company, Shenzen MTC, based across the Hong Kong border. The exchange was completed within 24 hours as against the usual 5-10 days for document exchange, the bank said.