Blockchain 'Perfect' For Trade

HSBC Says Performs First Trade Finance Transaction Using Blockchain

HSBC Says Performs First Trade Finance Transaction Using Blockchain

HSBC Holdings says it has performed the world's first trade finance transaction using blockchain technology, a major step in boosting efficiency and reducing errors in the multitrillion-dollar funding of worldwide trade.

It is hoped the use of blockchain in banking will help trim the risk of fraudulent transactions and cut back the number of steps needed in the process and speed up single transactions, which can take up to a week, to a matter of hours.

What's more, the Blockchain platform used is already being supported by 12 banks, who are working with R3 and their partners to continue the development to bring the platform to market more broadly.

The incentive? HSBC sees blockchain as a solution to help boost efficiency in the multi-trillion-dollar funding of worldwide trade. They both successfully executed the first live trade finance transaction using Blockchain for Cargill, an worldwide food and agriculture conglomerate. They also used the Corda blockchain technology, by startup R3, to undertake the trade transaction. The letter backed a shipment of soybeans transported last week from Argentina to Malaysia, said HSBC in a statement reported by Bloomberg.

A visibly elated Vivek Ramachandran, HSNC's global head of innovation and growth for commercial banking had said that "this is an inflection point for how trade is conducted".

The news provides further fuel to the debate that promotes blockchain as a solution to modernising modern finance and trade, many of which still rely on outdated computer platforms, or even paper-based systems.

According to the United Nations, digitizing all of the Asia-Pacific region's trade-related paperwork could slash the time it takes to export goods by up to 44%, cutting costs by up to 31% and boosting exports by as much as $257 billion a year. "We see the exciting potential of extending this technology into other areas of our financial ecosystem". The members include over 100 banks, trade associations and regulators.

In an announcement, HSBC said it could replicate Cargill's end-to-end digital ledger transaction with the same counterparties.

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