The paper focuses on the use of blockchain-based systems within the cross-border and trade finance areas of global banking. Blockchain technology can help develop a new path for this payment network, but in order to reach some kind of material scale, it will require a true global digital currency at its center. Currently, Bitcoin cannot scale up to the size that would be required.
The Wall Street Journal cites ‘intermediate term’ as a key phrase, noting that Bitcoin as currently built is too size-constrained to serve this international business. But commercial banks are not the only ones interested in digital currency and blockchain technology. Regulators and central banks are exploring the field and it is possible one of them could develop a digital currency that would fill the void.
The report sees more immediate promise for blockchain in trade finance, particularly as a means of replacing the letters of credit to use to finance a sizable proportion of international trade (approximately 20%). A typical transaction can entail 150 different records and up to 10 different parties signing off on the transaction. Moreover, about 80% of these transactions end up with some form of discrepancy that delays the transaction.
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now