According to a report by local media outlet Việt Nam News on Jan. 6, the issuance, document presentation and successful payment of L/C on the blockchain marks a major milestone on HDBank’s stated goal, to become a “Happy digital bank”.
According to Cointelegraph, the participants in the first transaction were a local fiber importer and a Taiwanese yarn manufacturer, along with the L/C advising bank in Taiwan.
Letters of credit are important documents in international trade, providing a guarantee from a creditworthy institution like a bank, that a buyer’s payment to a seller will be received on time and for the correct amount. Indeed, the bank underwrites the payment.
Using blockchain technology for L/C has many benefits like offering a higher level of security and a permanent record of the transaction. It also reduces the time needed to process such transactions to a matter of hours.
In May 2020, HDBank joined the HSBC-backed Contour network for L/C back.
The R3 Corda-based platform received a commercial launch in Q2 2020, following a successful trial in 2019.