Moscow Credit Bank (MCB) made history in the Russian financial market by issuing the country’s first bank guarantee in Chinese currency. MCB issued the bank guarantee exceeding 100 million Chinese yuan or $144,600 through the Masterchain blockchain platform, media reports said.
The Masterchain blockchain platform was created in Russia to facilitate the secure and transparent transfer of digital assets among its users. One of the major advantages of using this blockchain-based platform was that the beneficiary did not have to wait for a physical version of the document and make a separate request to the bank to verify the genuineness of the issued document. Instead, the ready-made bank guarantee was agreed upon by the three parties, making it impossible to be forged or lost.
Bank guarantees are financial safeguards that lending institutions agree to take financial responsibility for a particular transaction if the customer cannot fulfill their obligations. Bank guarantees are frequently employed in global trade deals to guarantee that payment is made or merchandise is delivered as agreed.
According to Natalya Bahova, who is the head of MCB’s International and Structured Finance Department, the Chinese currency is used for servicing most foreign trade contracts, and there is a persistent rise in the requirement for payments in yuan. She also mentioned that this move is a natural progression for the market, and we expect to see more instances soon. This decision would be particularly relevant for large corporations with numerous subsidiaries that frequently require bank guarantees in significant amounts.
As part of its ongoing efforts to explore the potential of blockchain technology and digital assets, Russia has been making significant strides in developing its regulatory framework to promote the adoption of blockchain and cryptocurrencies. President Putin recently signed a bill to legalize digital assets and cryptocurrencies in the country.
Furthermore, the launch of the consumer pilot for Russia’s central bank digital currency (CBDC) is scheduled for April 1, 2023, which is earlier than the originally planned date of 2024. Thirteen local banks and a few merchants will be carrying out the digital ruble transactions. The move is part of the Russian central bank’s efforts to find alternatives to SWIFT in the wake of Western economic sanctions.
Integrating blockchain technology within the banking industry could lead to faster and more secure transactions, which could play a significant role in the future of the global financial system. The successful issuance of the first bank guarantee in Chinese currency through the Masterchain blockchain platform could pave the way for more blockchain-based transactions in the Russian financial market.
