HSBC Carries Out Bangladesh’s First Blockchain Letter-of-Credit Transaction

The Bangladesh arm of HSBC, one of the world’s largest banks, has completed the country’s first cross-border blockchain trade finance transaction.

According to a press release on Tuesday, the digitized letter of credit (LC) transaction brought a notable reduction in the processing time compared with traditional methods – down from the average of five to 10 days to under 24 hours. The move signifies an important step for Bangladeshi companies in the digitalization of trade, the bank said.

Aimed to facilitate trade, a letter of credit is a financial guarantee from a bank overseeing a transaction between two parties. In the event one party is not able to honor their agreement, the bank steps in to cover the costs and complete the transaction.

“I believe this will usher in a new era of routing international trade transactions as businesses and governments recognize transparency, security, and swiftness in performing tasks using blockchain technology,” said Md Mahbub ur Rahman, CEO of HSBC Bangladesh.

HSBC ranks sixth amongst the world’s largest banks and has more than $2.7 trillion total assets under management, according to an S&P Global Market Intelligence 2020 report.

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