Moscow Credit Bank, a commercial Russian bank, has issued the country’s first blockchain-based guarantee to use Chinese yuan as currency.
The transaction was made using Russia’s national blockchain network, Masterchain, which is built to transfer digital assets between the country’s institutions. The guarantee was for more than 100 million yuan (£12m).
In a statement from Moscow Credit Bank (MCB), it said: The advantage of a digital bank guarantee is that the beneficiary does not need to wait for the paper version and make a separate request to the bank to confirm the authenticity of the issued document.”
“A ready-made bank guarantee, which is agreed upon by three interested parties, is displayed in the system on the Masterchain blockchain platform. It cannot be faked or lost.”
A bank guarantee is a form of financial protection offered by lending institutions. It consists of a contractual agreement where the bank agrees to take on financial responsibility for a specific transaction in case the customer fails to meet its obligations.
Such guarantees are commonplace in international trade transactions where there is a need for added security and reliability in the deliverance of payments or goods.
Natalya Bahova, director of international and structured finance at MCB, said: “This is the first digital bank guarantee in the market, which was issued in yuan, through the Masterchain system. Most foreign trade contracts are serviced in Chinese currency, and the demand for payments in yuan is only growing.
“This is a logical step for the market, we will see more examples of this in the near future. The decision 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.”
Amidst Russia’s unclear stance on cryptocurrency, the central bank is planning to launch its first consumer pilot of a central bank digital currency (CBDC) in April.
The digital ruble will be adopted by 13 banks and a number of merchants as part of the trial.
Originally scheduled for 2024, the pilot has been moved forward in light of economic sanctions impacting Russia’s use of the SWIFT payments system, as well as Putin’s take on the matter.
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