The Asian Development Bank, ADB, which is based in the Philippines has just completed its first letter of credit (LC) transaction. This has been done using the Contour blockchain network which is backed by Standard Chartered.
It is revealed that the trade was a part of trade and supply chain chain program of ADB and in this, it has got both Standard Chartered and the Bank for Investment and Development of Vietnam involved in it. This could also be seen as the first cross-border LC transaction, which is based on blockchain technology between Vietnam and Thailand.
ADB Did Not Mention How Blockchain Increased Trade Settlement Efficiency
A report has been released by Global Trade Review, which states that in this trade, there was a $50,000 plastic shipment. This shipment was sent from the SCG Plastic Co. Ltd. based in Thailand to Opec Plastics Joint Stock Company based in Vietnam. ADB has not mentioned yet how blockchain has increased the efficiency of the trade settlement.
Steven Back, the head of trade and supply chain finance at ADB has said that blockchain has helped way too much in making trade efficient along with reducing the risk.
Coronavirus Shows The Importance Of Trade Digitization
Due to the coronavirus pandemic, everybody has been maintaining social distancing measures which has shown how important it is to digitize trade. A lot of major firms also got involved in the international trade and supply chain through blockchain technology in order to reduce the paperwork.
Standard Chartered also recently conducted its first trade in Bangladesh, which is based on blockchain. Through this step, the multinational banking firm is aiming to introduce the South Asian countries for blockchain innovation. Chloe White, National Blockchain Lead, Australia has said that blockchain can play a major role in fighting against food and wine fraud which is very common in the country.