Multinational technology giant IBM is staking its claim to be part of the emerging blockchain technology letter of credit (L/C) market.

In partnership with several other technology companies and financial institutions, it is participating in the Hyperledger Project, which is led by the Linux Foundation and in which ABN Amro is involved.

Demonstration

In a high profile demonstration at International Blockchain Week in Shanghai, China, IBM presented its application for handling L/Cs using blockchain technology.

IBM senior research staff member Sheng Huang used an example of a consignment of flowers being traded internationally to demonstrate the utility of the application.

Process

He explained how L/Cs and shipping documents are visible to all parties, but only on a 'need to see' basis, throughout the international trading process.

All events in the process are logged onto the application. Typically, the transport company loading a consignment to a container and delivering it to the port of departure can see only the documents it needs to see when it needs to see them.

When the consignment arrives at the destination port, customs officers there checking the customs declaration can only see the documents relevant to them, and so on through the whole process, including the examination of L/C documents at various stages of the process.

Project partners

The Hyperledger Project now has 30 technology and financial institutions as partners. The Linux Foundation is a non-profit technology trade association chartered to promote, protect and advance Linux and collaborative open source technology development. ABN Amro is reportedly going to test the L/C application.

Several banks and technology partners have recently announced progress applying distributed ledger blockchain technology in L/C and other trade finance operations (DC World News, 22 and 30 August; 2, 12 and 16 September 2016).

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