Cargill Soybeans Part of Single Blockchain Transaction
In the world of global commodity trading, letters of credit are widely used to finance deals between importers and exporters, which helps guarantee more than $2 trillion in transactions. However, the process creates a long paper trail and can take anywhere from five to 10 days to exchange documentation.
To improve the efficiency of funding international trade, HSBC Holding Plc has performed the world’s first trade finance transaction using a single blockchain platform. In the past, other trade finance deals have used blockchain in combination with other technologies.
The deal, which was completed for Cargill by HSBC and Dutch bank ING, sent a shipment of soybeans from Argentina to Malaysia via the global commodities trader’s Geneva and Singapore subsidiaries.
Exprts believe the use of blockchain in banking will reduce the risk of fraudulent letters of credit and other transactions. It will also reduce the number of steps in the payment process.
According to a study by the United Nations, converting all of Asia Pacific’s trade-related paperwork into an electronic format could cut the time it takes to export goods by 44% and cut costs by up to 31%.