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Euro Exim Bank's Involvement with Blockchain Technology

Contributed by Euro Exim Bank
23 August, 2018

Blockchain technology is rapidly taking its place in the financial arena. We know that Distributed Ledger Technology (DLT) is a viable enabler to automate manual processes and reduce operational risk and cost. Implemented correctly, it will also facilitate collateral usage efficiently, add trust and enhance data quality via shared access.

Trade finance is a centuries-old business with multiple players, complex documents, geographies and regulations across its ecosystem. Despite little real change over time, new challenges of higher volume, complicated logistics and increased risk have arisen recently.

Blockchain technology has the potential to reduce disputes, provide delivery and payment assurance, certainty and finality to buyers and sellers, enabling transparency of trade asset movement, and facilitating the flow of trade receivables.

Additionally, it will be invaluable in combatting the early identity and rejection of fraudulent trades, instruments and processes. Blockchain technology will substantially mitigate the diversity and scale of fraud and risk around documents.

Recent frauds which may have had a different outcome if a blockchain solution was implemented include the USD1.1 billion legal action against Citigroup resulting from financing falsified receivables, and the Qingdao port metal financing fraud involving multiple invoices secured against the same collateral.

Euro Exim Bank & Blockchain Solutions

Euro Exim Bank's Blockchain Technology Solution is focussed and simple, initially covering Letters of Credit and smart contracts, using a structured approach to create a credible and easy to implement the application. It is built on IBM Hyperledger technology, integrated with our own SimpleX trade finance platform.

For SME's, we will make the blockchain technology available economically and efficiently, where our solution captures the entire lifecycle of trades. Complete visibility is guaranteed from the first view of a sales contract, through the creation of draft financial instruments, locking in associated due diligence, KYC and compliance documents all the way to payment, settlement and reconciliation functions as irrefutable, binding records.

What Future Holds for Blockchain Technology

Our view is that while the trade finance industry will embrace blockchain technology across their communications and platforms within an ever-shortening timeframe (3-5 years), it will quickly cease to be mere terminology.

It will be a component of business as essential as the internet and an embedded technology providing the framework for delivery of a secured service that global consumers will exceedingly stipulate.

Graham Bright
Head of Compliance
Euro Exim Bank Ltd


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