Banking News

China’s central bank endorses CITIC $42 billion trade finance blockchain

china citic bank

Today multiple Chinese news outlets report that a cooperation agreement for a blockchain forfaiting platform was signed between commercial banks China CITIC Bank, the Bank of China, China Minsheng Bank and the  People’s Bank of China (PBoC) Clearing Center. The solution was originated by China CITIC Bank in 2018 and has processed cumulative transactions of 300 billion yuan ($42 billion), up from 20 billion yuan ($2.82 billion) eleven months ago. Together, the two largest Chinese trade finance blockchains have processed more than $100 billion of trades.

With the deal, it’s considered that the CITIC platform has officially become the industry platform. In addition to standardizing contracts and the forfaiting of domestic letters of credit, it also enables secondary market trading in forfaiting assets amongst an alliance of 43 banks.

However, with the endorsement, the three banks are expected to transfer know-how to the PBoC Clearing Center to advance its domestic letter of credit blockchain solution launched last December. 

There are numerous trade finance and supply chain finance platforms in China, with CITIC’s forfaiting solution as one of the big three. Another is the PBoC Bay Area Trade Finance Blockchain for overseas transactions, which is currently being piloted and rolled out in numerous other regions. Eight months ago, it reported RMB 70 billion ($9.8 billion) in transactions. It’s unclear what the current total volumes are, but in June, the figure for the Guangdong Province (excluding Shenzhen) was $7.8 billion alone. The solution also integrates with foreign exchange and tax transactions.

For now, the biggest blockchain trade finance platform belongs to China Construction Bank. By the end of 2019, it had processed RMB 400 billion ($56 billion) as a mix of domestic letters of credit, forfaiting, international factoring and refactoring.