Driving commercial and political engagement between Asia, the Middle East and Europe
Driving commercial and political engagement between Asia, the Middle East and Europe
Driving commercial and political engagement between Asia, the Middle East and Europe
HSBC has completed ‘the world’s first’ trade finance transaction using a single blockchain platform, in what commentators have described as a ‘breakthrough’ for the technology and its real-world application.
HSBC announced that the blockchain transaction, completed with ING on behalf of Cargill, involved a bulk shipment of soybeans from Argentina to Malaysia.
While there have been other trade finance deals that use blockchain in conjunction with other technologies, the Cargill transaction ‘marked the first use of a single, shared digital application rather than multiple systems,’ Reuters reports.
According to IT insights website Tech Radar, which described the deal as a ‘breakthrough’, the transaction was staged on the R3 Corda platform, ‘which has been developed jointly by 12 of the world’s leading banks, and raised $107 million from backers including HSBC back in May 2017.’
The transaction was completed using Corda’s letter of credit (LC) system, which enabled processing time to be reduced significantly, a point emphasised by HSBC in a press release.
‘The transaction demonstrates that blockchain as a solution to trade digitisation, is commercially and operationally viable,’ the release said. ‘Conventional exchanges for paper-based documentation related to letters of credit usually take between 5-10 days.
‘This exchange was done in 24 hours.’
Blockchain was a key talking point at Asia House’s conference in Dubai last month, which explored how new technologies are transforming global trade. Speaking at the dialogue, Anthony Butler, Chief Technical Officer for IBM’s blockchain practice in the Middle East and Africa, said the cost of trade globally was US$1.8trillion – 20 per cent of which relates to paper.
“What we were able to do is take all of that and put that on the blockchain, and by doing so we’re already seeing impressive results in terms of removing latency and friction from global trade and also improving visibility and transparency into the container supply chain,” he said.
