China National Clearing Centre (CNCC), a subsidiary of the Chinese central bank, has signed a cooperation agreement for a blockchain forfaiting platform with Bank of China, China CITIC Bank and China Minsheng Bank.

The three banks are expected to transfer know-how gained from CITIC's blockchain forfaiting platform to CNCC to advance its domestic L/C blockchain solution launched last year.

Official adoption

The agreement calls for CNCC to apply the blockchain technology underlying the forfaiting transaction platform to its own electronic L/C system with the aim of improving its ability to perform asset transactions.

The agreement signals the official adoption of the blockchain-based forfaiting transaction platform launched by CITIC in 2018.

Together, the two largest Chinese trade finance blockchains have processed more than US$100 billion of trades.

L/C transactions

CNCC first launched its electronic L/C transaction system on 9 December 2019 with the approval of the People's Bank of China, the Chinese central bank.

As well as standardising contracts and the forfaiting of domestic L/Cs, the CITIC platform also enables secondary market trading in forfaiting assets amongst a network of 43 banks.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.