The transaction was conducted using the Masterchain blockchain platform, the official blockchain network of Russia.
Moscow Credit Bank reportedly issued the country’s first blockchain-based bank guarantee in Chinese yuan. At the time of writing, the bank guarantee surpasses 100 million Chinese yuan, or around $144,600.
According to a release, the transaction was executed on the Masterchain blockchain platform, the Russian national blockchain network designed to facilitate the transfer of digital assets between members.
According to the financial institution, the benefit of conducting the transaction on-chain is that “the recipient does not need to wait for the paper version and submit a second request to the bank to verify the legitimacy of the issued document.”
A bank guarantee is a kind of financial protection a financial institution provides. A bank agrees via a contract to assume financial responsibility for a particular transaction if the client fails to meet its commitments. In international commerce transactions, bank guarantees are often used to fulfill payments and deliver items as promised.
On the Masterchain blockchain platform, a bank guarantee that the three parties have agreed upon is presented. As importer contracts are indexed to the Chinese currency, the yuan is the currency of the bank guarantee. The recipient will receive Russian rubles at the agreed-upon exchange rate if payment is made according to the security.
Director of MCB’s International and Structured Finance Department Natalya Bahova remarked: “Most international trade contracts are settled in Chinese currency, and the demand for yuan payments continues to rise. This is a natural progression for the market, and we will see more instances shortly. The ruling will be particularly significant for major enterprises with several subsidiaries that regularly take bank guarantees in substantial amounts.”
Russia’s central bank is prepared to launch the first consumer pilot for its central bank digital currency (CBDC) on April 1, 2023, as part of the country’s continuous crypto advances. According to Cointelegraph, thirteen local banks and retailers would process the digital ruble transactions.
The CBDC pilot was initially planned to start in 2024, and the date was moved forward as the Russian central bank explored alternatives to SWIFT in light of Western economic sanctions.
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