China’s foreign exchange reserve regulator, the State Administration of Foreign Exchange (SAFE), is set to pilot a cross-border trade finance blockchain platform. The news was reported by local financial news agency CNStock on April 24.
According to the report, the development of the platform was initiated by SAFE and completed in collaboration with the Hangzhou Blockchain Technology Research Institute.
The latter, also known as China Banknote Blockchain Technology Research Institute, has reportedly completed the technical undertaking of the project under the China Banknote Printing and Minting Corporation, which is directly affiliated to the People’s Bank of China (PBoC).
Being largely based on manual, paper-based processing, China’s current traditional import and export trade financing system is reportedly beset by low operational efficiency and asymmetrical, incomplete data sharing.
To better tackle the complex logistics of trade financing transaction management, data can be recorded on a cryptographically secured distributed network that allows for real-time and transparent data sharing, the report notes. It can thus improve operational efficiency and security and reduce costs.
The platform reportedly has the capacity to manage the entire trade financing process — which includes automatically verifying the authenticity of customs documents and corresponding financing balances, thus preventing double or excessive financing, according to the report.
The blockchain system provides comprehensive regulatory management, and can notably ensure that participants’ data is only visible to counterparties, regulators, or other approved entities, the report adds.
Now that development of the platform has been completed, SAFE reportedly intends to pilot the project for six months in three major trading provinces – Jiangsu, Zhejiang and Fujian – and two cities, Shanghai and Chongqing.
After the pilot’s completion, the platform is expected to be promoted nationwide. It will reportedly add support for further business scenarios as well as draw participation from numerous major banks, including the Bank of China, the report states.