The Bangladesh branch of one of the world’s largest banks, HSBC, made the first international letter of credit using a payment transaction via the blockchain platform. This is a milestone that can significantly accelerate international trade.
According to a press release from HSBC, the digitized letter of credit brought a significant reduction in the time for which this tool used in international trade was processed. Instead of the usual five to ten days, everything was ready in less than 24 hours. “This is a significant step for Bangladeshi companies on the road to digitizing the business,” HSBC said in a statement.
The first blockchain letter of credit paid for the delivery of twenty thousand tons of fuel oil from Singapore. The fuel was acquired by the Bangladeshi company United Mymensingh Power Ltd. for its power plant. A letter of credit is a payment instrument used in international trade. It is the bank’s obligation to the supplier of the goods to pay a certain amount according to the letter of credit conditions.
“I believe we are on the threshold of a new era of international payments, as companies and governments are proving to recognize transparency, security and speed in blockchain operations,” said Mahbub ur Rahman, CEO of HSBC’s Bangladeshi branch.
