In China in August 2017, Zheshang Bank created Zheshang Chain which is an accounts receivable blockchain. Last week it issued a loan note for $68 million using some of these receivables as asset backing for the note. The loan note has a term of 354 days.
Recently the Chinese authorities have been encouraging securitization as a way to use capital more efficiently. The significant advantage of blockchain is the transparency it brings to the underlying assets. Some even believe that the 2008 financial crisis might have been avoided because the poor quality of the asset backing would have been apparent.
For the Zheshang note, the enterprises entrust their accounts receivables to a trustee, China Railway Trust, via Zheshang Bank, to establish an asset-backed note. The receivables backing the note are from a wide range of companies.
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