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The
banks joined with Infocomm Development Authority of Singapore to
emulate a letter of credit transaction. Letters of credit are
one of the most widely used ways to reduce risk between
importers and exporters, helping guarantee more than $2 trillion
worth of transactions, but the process creates a large paper
trail and is time consuming.
By putting the transaction on a distributed ledger, the importer
and its bank, together with the exporter and its own bank, can
see the data in real time.
Financial services companies around the world have been focusing
on developing blockchain technology, with advocates saying it
has the potential to save billions of dollars in costs and speed
up transaction times. The technology, which underpins the
digital currency bitcoin, creates a shared database in
which participants can trace every transaction.
Discussions are underway with other banks, corporate clients and
shipping companies to further develop the technology, which is
in its early stages, said Vivek Ramachandran, global head of
product for HSBC's trade finance business.
(Reporting by Elzio Barreto; Editing by Alexander Smith)
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