China-based CITIC Bank has launched what it claims to be the first ever letter of credit (L/C) system in the Chinese banking industry based on blockchain or distributed ledger technology.

The platform aims to make all stages in the L/C transaction process more efficient and transparent.

Cost savings

The platform enables buyers to connect with banks online in aspects of a transaction including L/C issuance, acceptance, notification and payment.

The network also allows both buyers and sellers to trace the progress of an L/C and aims to reduce or eliminate fraud and errors.

Partnership provisions

CITIC partnered with Minsheng Bank to launch the new platform. As well as the technological arrangements needed in the partnership, the banks also had to reach agreement in other areas.

The banks agreed to institute common principles of cooperation, definitions of technical terms, overall standards, confidentiality and legal provisions.

CITIC says it is committed to developing its range of blockchain-based offerings and is undertaking more research and conducting extensive tests to improve its service delivery and expand its product range by incorporating the latest technologies.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.