China’s FX reserve regulator to pilot blockchain-based cross-border trade finance platform

The State of Administration of Foreign Exchange (SAFE), China’s foreign exchange reserve regulator, has developed a blockchain-based cross-border trade finance platform, local news outlet CNStock reported.

Per the report, the platform was built in collaboration with the Hangzhou Blockchain Technology Research Institute. It aims to address the challenges faced by small and medium-sized enterprises in cross-border trade finance.

The existing manual and paper-based process lead to a high cost of verification, incomplete financing information, repeated financing, and difficult supervision in cross-border business trade financing, which ultimately increases the financing cost of enterprises.

The blockchain-based system will help address these issues and bring more efficiency to cross-border trade finance.

Taking export receivables as a use case, the report explains that the platform will allow companies to submit data on financing, audit, loans, and repayments, among others, and manage the entire process. It added (via online translation):

“The core document “Export Customs Declaration” in export trade financing is checked through the blockchain system to verify the authenticity of the document, and the financing balance of the corresponding customs declaration can be automatically calculated to prevent double financing and excess financing.”

SAFE has selected three major foreign trade provinces – Jiangsu, Zhejiang and Fujian – and two cities, Shanghai and Chongqing, to pilot the platform.

“The pilot will run for half a year, and it is expected to be promoted nationwide in the future,” the report said, adding that a number of banks are also participating in the project.