Chinese Banks Bet Big on the Potential of Blockchain Technology


A slew of Chinese banks have made major forays into the use of blockchain technology since the start of 2018, as China emerges as the world’s leading applicant for patents in the field.

Chinese banks that have launched blockchain initiatives in recent months include Bank of Communications, China Zheshang Bank and the Postal Savings Bank of China.

In September Bank of Communications used its independently developed “Jucai Chain” (聚财链) blockchain asset securitisation platform to successfully issue 9.314 billion yuan in residential mortgage backed securities (RMBS).

The same month also saw Postal Savings Bank launch its U-link platform (U链平台), which used blockchain technology for China’s first secondary market forfaiting transactions, in August China Zheshang Bank officially issued China’s first blockchain-based accounts receivable asset-backed notes (ABN) via the Shanghai Clearing House.

Zheshang Bank said the issuance of 457 million yuan in blockchain-based ABN was the first transaction of its kind on China’s interbank market, and would help to resolve the problem of excessively high accounts receivable levels for enterprises.

“This product makes creditor’s rights for accounts receivable of different enterprises on the accounts receivable chain platform the underlying asset, and via the design of securitised products and public issuance on debt markets revitalises the stock of assets in the real economy,” said Shen Bin (沈滨), the head of Zheshang Bank’s investment banking division.

The push by Chinese banks for greater use of blockchain technology arrives just as China emerges as the world’s leading applicant for blockchain-related patents.

The “Blockchain White Paper (2018)” (区块链白皮书(2018年)) issued by the China Academy of Information and Communications Technology indicates that as of July 2018 China’s blockchain patent applications had reached 2002 in total, well ahead of the 1076 filed by parties in the United State.

“The ideal financial system should possess four characteristics,” said Cai Yinghong (蔡膺红), vice-head of technology at China Minsheng Bank, to the Chinese Central Bank’s Financial News.

“The first is mechanisms that can eradicate information asymmetries within systems; the second is a means for reducing overall system operating costs; the third is a guarantee that protects data privacy, and the fourth is regulation that makes each step in the system both open and transparent.

“The technology which is capable of fulfilling these four requirements is the blockchain.”

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