The Chinese steel company, Baosteel, has completed a letter of credit (LC) transaction using blockchain technology. Baosteel completed the renminbi LC in partnership with Rio Tinto, an Australian mining firm.
The transaction is the first time a cross-border deal is completed paperless, using the renminbi. The transaction was powered by British multinational financial services company Standard Chartered Bank (SCB) and shows promise for more widespread use of blockchain technology.
The SCB ran and completed the deal using Contour, an open trade finance platform powered by R3’s Corda enterprise blockchain. Speaking on the development, SCB Chief of Documentary Trade, Samuel Matthew, expressed excitement on behalf of the bank.
“We are delighted to have played an important role as the digital LC issuing bank in such a significant trade which marks the first RMB-denominated international LC between two banks via blockchain.”
The development brings great tidings for the future of finance and blockchain adoption, especially for international transactions. However, some believe that this is part of a plan from the Chinese government, to offset some power the United States has through the dollar.
China is already testing its central bank digital currency. In April, testing began in Suzhou city through transport subsidies. Workers at a few agencies in the Xiangcheng District of Suzhou were slated to begin receiving half their transport subsidies in the CBDC.
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