Groundbreaking HSBC blockchain transaction to revolutionize trade

Groundbreaking HSBC blockchain transaction to revolutionize trade

The transaction, using the cutting-edge blockchain technology driving virtual currencies like bitcoin, involved a bulk shipment of soybeans from Argentina on behalf of USA agriculture group Cargill, the pair said in a statement.

Last week, a shipment of soybeans was transported from Argentina to Malaysia via Cargill's Geneva and Singapore subsidiaries. The incentive? HSBC sees blockchain as a solution to help boost efficiency in the multi-trillion-dollar funding of global trade. Unlike previous trade finance deals that used blockchain in the past, this was the first time a single shared digital application was employed as opposed to multiple systems.

The companies exchanged the information needed for the letter of credit in 24 hours, the banks said.

HSBC handled the deal for U.S. food and agricultural group Cargill, in partnership with Dutch ING Bank NV.

The transaction marks a tipping point in the way goods are bought and sold, HSBC and ING Bank said in a media release on Monday. "The need for paper reconciliation is removed because all parties are linked on the platform and updates are instantaneous".

Incremental North Korean denuclearisation will be unacceptable - South Korea official
A move like denuclearisation would conflict the integral power structure of North Korea, Thae added. Thae also noted that North Korea was likely to open its borders to tourism projects near its coast.

The blockchain distributed ledger technology, which underpins cryptocurrencies such as Bitcoin, has the potential to be used for encrypted and unhackable record-keeping across a number of industries. "Therefore, it's a key technology we are exploring and using with our own customers and, now, using for ourselves with the completion of this transfer on Corda", explained Rani Misra, Regional Treasurer, APAC, Cargill.

Citing statistics from the United Nations, HSBC claims that digitizing trade could reduce transaction time by 44 percent, reduce costs by 31 percent and save the industry $257 billion per year. "The quick turnaround could mean unlocking liquidity for businesses", added he.

Analysts say that blockchain could make settling transactions much easier by eliminating or reducing the interoffice paper-shuffling traditionally required to clear a trade. Corda was developed by the New York-based blockchain consortium R3.

Ramachandran said HSBC already had another client lined up for the next similar transaction.

R3, along with supporting banks, is now looking to expand the use of the network as a utility for the trade finance sector.

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