Chinese Central Bank Applies Blockchain Technology to Electronic Letters of Credit
A subsidiary of the Chinese central bank has entered a cooperative agreement with a trio of domestic lenders for the greater use of blockchain technology already applied to forfaiting transactions.
The China National Clearing Center (CNCC) – a subsidiary of the People’s Bank of China (PBOC), officially executed the “blockchain forfaiting transaction platform cooperative agreement” with Bank of China, China CITIC Bank and China Minsheng Bank on 4 August.
According to a report from Xinhua the execution of the agreement means that the blockchain-based forfaiting transaction platform launched by China CITIC Bank has officially become the standard institution for the Chinese banking sector.
Under the agreement CNCC will apply the blockchain technology underlying the forfaiting transaction platform to its own electronic letter of credit (LOC) system, in order to improve its ability to perform asset transactions.
CNCC first launched its electronic LOC transaction system on 9 December 2019 with the approval of PBOC.
CNCC said it would make full use of blockchain technology to improve the security and reliability of the electronic LOC transaction system, which it expects to become a “key component of national public financial infrastructure.”
The upgraded system will “unify operating standards, be integrated with PBOC’s large-sum payments system, facilitate interbank forfaiting asset transactions, raise the trade financing efficiency of the forfaiting sector, and reduce enterprise financing costs.”
The consortium blockchain forfaiting transaction platform operated by China CITIC, BOC and China Minsheng currently has 43 members, and has processed over 300 billion yuan in operations.