HSBC has completed the world's first cross-border Renminbi-denominated blockchain-based letter of credit (LC) transaction.
The live transaction was made using Voltron, a blockchain-based documentary trade finance network developed by HSBC and a host of other major banks.
The transaction saw Hong Kong-based MTC Electronic export a shipment of raw materials to its mainland-based parent company, Shenzhen MTC.
HSBC China used Voltron to issue a digitised LC on behalf of Shenzhen MTC to HSBC Hong Kong. MTC then reviewed, verified and uploaded their own trade documents to the platform to complete the transaction.
The exchange of documents took 24 hours, a significant reduction on the typical five to 10 days required for conventional paper-based LCs.
Overall, 1.2 million LCs worth US$750 billion were issued into and out of China in 2018, according to Swift.
“Shorter turnaround times mean improved working capital and better control of cash flow,” says Ajay Sharma, regional head, global trade and receivables finance, Asia-Pacific, HSBC.