Bank of America Merrill Lynch and HSBC team up for blockchain-based trade finance innovation
Bank of America Merrill Lynch, HSBC and the Infocomm Development Authority of Singapore (IDA) have teamed up to develop a blockchain prototype for trade finance innovation.
The consortium uses the distributed ledger framework provided by Linux Foundation’s open source Hyperledger Project; and the proof of concept has reduced manual processing in letter of credit transactions.
By using a private distributed ledger to share information between exporters, importers and their respective banks; they say trade deals can be automatically executed through a series of digital smart contracts.
Vivek Ramachandran, global head of product for HSBC’s trade finance business, says: “Letters of credit are an important part of the trade system, but they are based on 20th century technology, not 21st. Our challenge is to take this from concept to commercial use.”
Ather Williams, head of global transaction services, Bank of America Merrill Lynch, adds that blockchain has “reshaped” its thinking on how to make transaction processes “more efficient and transparent for all parties”.
The consortium is now looking to carry out further testing on the concept’s commercial application.
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The United Nations Children’s Emergency Fund (UNICEF) started looking for a developer to work on humanitarian projects, including the use of blockchain for innovation.