Bangladesh’s City Bank recently completed a cross-border Letter of Credit (LC) transaction on Contour’s blockchain network (not to be confused with the Citi bank, which is a member of the Contour network). The trade was financed by the Islamic Development Bank (IsDB) through its trade solutions subsidiary, the International Islamic Trade Finance Corporation (ITFC).
Letters of Credit are an important type of trade finance, traditionally used for large shipments. They tend to be slow and paperwork heavy, something that blockchain aims to ease. For this project, an LC was issued on behalf of Bangladeshi RMG Debonair Group for clothing accessories imported from Hong Kong-based Apparel Link.
A typical cross-border LC issuance takes 24 to 72 hours. The whole process took 38 minutes on Contour’s blockchain which leverages R3’s Corda blockchain technology. Contour previously estimated that digitizing LCs would speed up the process by 90%.
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