China Banking Association (CBA), a self-regulatory bank organization, is planning to launch a new blockchain-powered system to improve efficiency across the banking sector.
The new system, dubbed the China Trade Finance Inter-Bank Trading Blockchain Platform, is based on a distributed data storage, point-to-point transmission, consensus mechanism and encryption algorithm of blockchain. It is intended to standardize the digitization of transaction information of interbank trade financial products and control financial risks.
According to the CBA, ten banks have joined the initiative, including Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank, Bank of Communications, China Merchants Bank, China Everbright Bank, Shanghai Pudong Development Bank, China Postal Savings Bank, Ping An Bank, and HSBC Bank (China). These banks reportedly completed two network tests which accomplished their objectives.
“The establishment of this inter-bank platform can be described as extraordinary, opening up barriers between different banks and realizing the interflow of information,” HSBC China vice president and head of industrial and commercial finance Fang Xiao. “The use of blockchain technology to promote trade finance reform has become a global trend. The HSBC Group’s overseas blockchain trade pilots show that the blockchain is used to improve the efficiency, safety and scale of trade.”
The working version of the platform is expected to be rolled out later this year. The CBA also plans to extend access to small and medium-sized banks and add different types of trade finance products.
“The China Banking Association plans to further expand the platform coverage, absorb the majority of small and medium-sized banks to join the platform, expand the platform business type, and actively cooperate with relevant agencies such as taxation and customs to give full play to the platform of industry organizations,” the CBA said.
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