The central bank in Thailand has recently disclosed that fourteen Thai banks will join hands to develop a shared trade finance platform based on blockchain technology.
Blockchain: the Banks are on board
Within the fourteen, the big four banks, Bangkok Bank, Krung Thai Bank, Siam Commercial Bank and Kasikornbank are on board and are scheduled to launch electronic letters of guarantee on a shared blockchain platform. The service will firstly be tested and come online eventually by September of this year.
The system was initially launched by Kasikornbank in collaboration with U.S. computing company IBM last July. It is built on a distributed ledger framework called Hyperledger Fabric provided by the Linux Foundation. State enterprises are already using letters of guarantee issued through the system, according to the bank.
The group would be similar to the Digital Trade Chain consortium that was formed last year by seven European banks such as Deutsche Bank and HSBC to develop a shared trade finance platform using blockchain.
“With this infrastructure sharing, banks do not need to invest on their own,” Bank of Thailand Gov. Veerathai Santiprabhob told reporters Monday. “Interoperability enhances efficiency, reduces costs in our financial sector and addresses the needs of the consumer and the business sector.”
Letters of Guarantee
The new blockchain system will digitise the documents and shorten the process to as little as 30 minutes. Previously in Thailand this was a lengthy process and sometimes took a few days to process!
Initially, the blockchain service will cover letters of guarantee issued for bidders in state-owned enterprise auctions and other domestic trading. Seven corporates, including the state-owned Electricity Generating Authority of Thailand and industrial conglomerate Siam Cement Group, are set to use the system. The companies will be able to store their suppliers’ letters of guarantee using the cloud system and obtain updated documents whenever they want.
View the original article here on the Nikkei Asian Review Website, written by YUKAKO ONO, Nikkei staff writer.