The People’s Bank of China’s (PBOC) hopes to facilitate letter of credit operations in China with the launch of a new online cross-bank letter of credit information sharing system.
The PBOC General Bank Clearance Center (清算总中心) officially commenced operation of the Electronic Letter of Credit Information Exchange System (电子信用证信息交换系统) on 9 December, with the goal of resolving problems that have long hampered LC operations in China, including lack of standardisation, difficulty of cross-bank circulation and separation of handling and funds settlement.
According to PBOC the system makes use of internet and computing technology to provide a unified, online domestic LC handling and information exchange platform, as well as an information transfer platform for funds settlement and other services.
The system provides three main services at present:
- Support for cross-bank transfer of electronic LC’s.
- Achieving online LC fund settlement.
- Providing standardised operations regulations and benchmarks.
A total of 14 banks are participating in the trial run of the system, including all six of China’s big state-owned banks, alongside China Merchants Bank, Shanghai Pudong Development Bank, China CITIC Bank, China Minsheng Bank, Ping An Bank, Bank of Shanghai, Bank of Hangzhou and Bank of Guilin.
On its first day of operation the system processed a total of 20 LC operations involving seven banks, for funds totalling 165.22 million yuan.