Moscow Credit Bank has made history by issuing the first blockchain-based bank guarantee in China’s currency, the yuan. The transaction, which exceeded 100 million yuan, was conducted through the Masterchain blockchain platform, Russia’s national blockchain network.
According to the bank, one advantage of using the blockchain platform for the transaction was that the beneficiary did not need to wait for a paper version of the document or make a separate request to the bank to confirm its authenticity.
The ready-made bank guarantee displayed on the Masterchain platform is agreed upon by three parties and cannot be faked or lost, making it a secure way to conduct international trade transactions.
Bank guarantees are a financial safeguard offered by a lending institution, whereby the bank assumes financial responsibility for a specific transaction if the customer fails to fulfill its obligations. They are commonly used in international trade transactions to ensure that payment is made or goods are delivered as promised.
Natalya Bahova, director of the MCB’s International and Structured Finance Department, noted that most foreign trade contracts are serviced in Chinese currency, and the demand for payments in yuan is only growing.
The decision to issue the bank guarantee in yuan will be especially relevant for large groups of companies that have many subsidiaries that accept bank guarantees in large quantities and on a regular basis.
This historic move by Moscow Credit Bank comes as part of Russia’s ongoing crypto developments, with the central bank preparing to launch the first consumer pilot for its central bank digital currency (CBDC) on April 1, 2023.
The digital ruble transactions will be conducted by 13 local banks and several merchants, indicating that Russia is taking a serious interest in blockchain and crypto technologies.
