A blockchain-based bank guarantee issued by Moscow Credit Bank in Chinese yuan is said to be the first on-chain bank guarantee in the nation.
At the time of publication, the bank guarantee was worth more than 100 million Chinese yuan, or roughly $144,600.
The transaction, according to a release, was carried out via the Masterchain blockchain platform, which is a national blockchain network for Russia designed to transfer digital assets between users.
The financial institution listed “the beneficiary does not need to wait for the paper version and make a second request to the bank to check the legitimacy of the issued document” as one benefit of doing the transaction on-chain.
On-chain bank guarantee
Russia first on-chain bank guarantee is a financial safeguard offered by a lending institution. A bank accepts through a contract to take over financial responsibility for a particular transaction in the event that the customer defaults on its obligations.
In order to assure that the promised items are delivered or that payments are made as promised, bank guarantees are frequently employed in international commerce transactions.
A ready-made bank guarantee that has been approved by three parties is presented on the Masterchain blockchain platform.
The bank claimed that it couldn’t be faked or misplaced. As the importer’s contracts are tied to the yuan, that is the currency of the bank guarantee.
The recipient will be given Russian rubles at the predetermined exchange rate if a payment is made under the guarantee.
Director of the MCB’s International and Structured Finance Department Natalya Bahova made the following observation:
“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.”
Russia and the blockchain technology
Russia’s central bank is getting ready to launch the first consumer pilot for its central bank digital currency (CBDC) on April 1st, 2023 as part of the nation’s continuous cryptocurrency initiatives. 13 regional banks and a number of retailers will handle the digital ruble transactions.
The CBDC pilot was supposed to launch in 2024, but it was accelerated since the Russian central bank was looking for SWIFT alternatives because of Western economic sanctions.
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