China CITIC Bank International (CNCBI) says that during its 2017 financial year it facilitated blockchain-based domestic letter of credit (L/C) transactions worth a total of US$156 million.

Chinese banks and merchants are now looking at other ways to use blockchain to improve supply chain financing.

Quicker and cheaper

In 2017, in collaboration with Minsheng Bank, CNCBI developed a system for the settlement of credit based on blockchain technology.

The system transforms the issuance and delivery of domestic L/Cs into electronic format, thereby saving time and delivery cost.

Banks and buyers

The first transaction on the system called BCLC - shorthand for blockchain letter of credit - involved a US$100 million L/C transaction.

The system connects buyers with banks on the network to carry out tasks including issuing, notifying, accepting, and paying with full transparency.

L/C visibility

It allows buyers and sellers to track L/C traffic by following each node and avoid errors and fraud.

The banking arm of Chinese retail giant Suning has now joined CNCBI and Minsheng Bank to help develop the use of blockchain in trade finance further.

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