Blockchain Trade Finance Solution Developed By China’s Forex Regulatorbr>
The State of Administration of Foreign Exchange (SAFE), China’s foreign exchange reserve regulator, has developed a blockchain system aimed to address inefficiencies in cross-border trade finance.
Local financial news agency CNStock reported that the blockchain platform, which was built in collaboration with the Hangzhou Blockchain Technology Research Institute, uses multi-signature technology to ensure the content of transactions are kept private, and details are only available for the firms involved in the deal as well as regulators.
At present, the processes involved in import and export financing in China are largely paper based, which leads to frequent errors and high operational risks in what is already a complex industry. This ultimately increases the financing cost of enterprises. According to the report, by using a blockchain technology, this information would be able to be shared transparently and in real-time, improving operational efficiency and security and reduce costs.
SAFE’s blockchain platform will reportedly focus on export receivables, funds owed to companies from foreign buyers after export, allowing companies to enter data on financing, audits, loans repayments and so on, and manages the entire process.
“The core document “Export Customs Declaration” in export trade financing is checked through the blockchain system to verify the authenticity of the document, and the financing balance of the corresponding customs declaration can be automatically calculated to prevent double financing and excess financing,” the report said.
SAFE will be piloting the blockchain platform for six months in three major trading provinces – Jiangsu, Zhejiang and Fujian – and two cities, Shanghai and Chongqing. Many banks are said to be involved in the pilot project. Following the pilot, the platform is expected to be adopted nationwide.