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Vietnamese bank issues its first letters of credit on the blockchain

Vietnamese bank issues its first letters of credit on the blockchain

Major Vietnamese bank HDBank has now become the first bank in the country to issue letters of credit, or L/C, using blockchain technology.

According to a Wednesday report by local media outlet Viet Nam News, the issuance, document presentation and successful payment of L/C on the blockchain marks a major milestone toward HDBank’s stated goal to become a “happy digital bank.”

The participants in the first transaction were a local fiber importer and a Taiwanese yarn manufacturer, along with the L/C advising bank in Taiwan.

Letters of credit are important documents in international trade, providing a guarantee from a creditworthy institution, such as a bank, that a buyer’s payment to a seller will be received on time and for the correct amount. In essence, the bank underwrites the payment.

Using blockchain technology for L/C has many advantages, such as offering a higher level of security and a permanent record of the transaction. It also reduces the time needed to process such transactions to a matter of hours.

HDBank joined the HSBC-backed Contour network for L/C back in May 2020. As Cointelegraph reported, the R3 Corda-based platform received a commercial launch in the second quarter of 2020 following a successful trial in 2019.

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