AN HSBC and Bank of America Merrill Lynch venture and financial technology firm R3 said separately yesterday that they had created ways of using blockchain technology to simplify trade finance processes.
The two banks said they had joined with the Infocomm Development Authority of Singapore to emulate a letter of credit transaction. Letters of credit are one of the most widely used ways to reduce risk between importers and exporters, helping guarantee more than US$2 trillion worth of transactions, but the process creates a large paper trail and is time consuming.
R3 said more than 15 of its consortium member banks have also designed self-executing transaction agreements, known as smart contracts, on R3’s distributed ledger platform to process accounts receivable purchase transactions, known as invoice financing or factoring, and LOC transactions.
For more on this story visit the following link: Blockchain tech to ease trade finance
Source: Shanghai Daily