A financial institution in Russia has issued the first blockchain-based bank guarantee denominated in Chinese yuan. The advantages of using a digital version of the document were highlighted and noted that there is an increasing demand for payments in the currency.
MKB Employs Bank Of Russia’s Masterchain To Offer Bank Guarantee In Yuan
Moscow Credit Bank (MKB) issued the following statement. Russia’s first digital bank guarantee for an amount exceeding 100 million Chinese yuan, using blockchain technology — the Masterchain Platform developed by the Central Bank Of Russia.
In RBC quoted a press release Crypto, MKB explained that the guarantee is denominated in the currency to which the importer’s contracts are linked. In If the payment is made under it, then the supplier will be paid. Russian Exchange rate between the parties agreed to in rubles
The The three parties involved: the principal, the bank guarantee guarantor, and the beneficiary, agreed to bank guarantee. The touted advantage of using a digital document, which purportedly cannot be forged or lost, is that the beneficiary doesn’t need to wait for the paper version or request a confirmation from the bank about the authenticity of the guarantee.
“This is the inaugural 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 there is a growing demand for payments in yuan,” commented Natalya Bahova, director of MKB’s International Structured Finance Department.
The Executive added this is an “logical step” and that it’s likely to see more such examples in the future. “The decision will be especially relevant for large groups of companies which have many subsidiaries that accept bank guarantees in large quantities and on a regular basis,” Bahova elaborated.
Russian According to the report, companies spend approximately 900 million rubles per year (almost $12,000,000) to validate bank guarantees’ authenticity. And Even then, only 0.5% of them end up being fakes. Related The risk of a disaster has been estimated at 75 billion rubles
Amid Sanctions imposed on the West Its invasion of Ukraine, Russia It has been looking for ways to reduce its reliance on the U.S. Dollar and the traditional financial systems, including using other fiat currencies, blockchain technology, and digital assets.
A Russian bank has recently made a digital asset transaction involving a foreign currency, China’s yuan, utilizing blockchain technology. This marks the first authorized crypto transaction between the two countries, as the Russian government has been attempting to establish a regulatory framework for decentralized currencies, such as bitcoin.
In January 2021, a law known as “On Digital Financial Assets” was passed in Russia to authorize the utilization of crypto and digital payments to bypass economic restrictions. Additionally, both Russia and China have developed digital versions of their respective fiat currencies.
The use of blockchain technology and cryptocurrency is becoming more prevalent in the international space. It will be interesting to see what other uses arise from this technology, particularly in Russia. Share your thoughts in the comments below.