cross-border trade

Ant Group Launches Blockchain-Powered System to Help SMEs in Cross-Border Trade

Ant Group, China’s Alipay owner, has established a blockchain-enabled smart contract platform dubbed Trusple to assist small and medium enterprises (SMEs) in carrying out cross-border trade seamlessly. The blockchain system is touted to be a stepping stone towards assisting SMEs and banks hasten and secure the settlement and processing of orders.

Securing cross-border trade

Trusple is an open platform and is based on Ant Group’s blockchain technology called Antchain, which automatically produces a smart contract whenever buyers and sellers upload trading orders. In turn, the trading parties’ banks can process payments because key information like logistics, order placements, and tax refund options are instantly attended to.

Trusple also leverages other cutting-edge technologies like the internet of things (IoT) and artificial intelligence (AI) to offer solutions like secure computation.

Jiang Guofei, the president of advanced technology at Ant Group, noted:

“Just like when Alipay was introduced in 2004 as the online escrow payment solution to build trust between buyers and sellers, with the launch of AntChain-powered Trusple, we look forward to making cross-border trading safer, more reliable, and more efficient for buyers and sellers, as well as for the financial institutions that serve them.”

Building creditworthiness

SMEs are expected to build their creditworthiness with accomplished transactions on Trusple. This will be instrumental in obtaining financial services from monetary institutions. The launch of the blockchain-based platform comes at a time when Ant Group is preparing for a blockbuster initial public offering (IPO), valued at nearly $30 billion.

In June, China’s first national-level blockchain cross-border financial system went live to promote fintech innovations after it was launched by China Guangfa Bank (CGB).

The emerging blockchain developments in China are in line with President Xi Jinping’s calls for the nation to roll up its sleeves to become a blockchain haven. He stipulated that the application of this cutting-edge technology had extended to digital asset trading, supply chain management, intelligent manufacturing, IoT, digital finance, and other fields.

JPMorgan Partners with DBS Group and Temasek to Develop Blockchain-Powered Trade Platform

Leading American bank JPMorgan has joined hands with Singapore-based investment company Temasek and DBS Group Holdings to create a blockchain-enabled foreign exchange settlement, trade, and payment platform for seamless cross-border transactions.

Leveraging blockchain technology to curb trade frictions

The company behind the new blockchain-powered platform will be called Partior. It will utilize blockchain technology to streamline cross-border currency settlements, trade, and payments by minimizing current latency and frictions.

As per the announcement:

“Partior is expected to develop wholesale payment rails based on digitized commercial bank money to enable “atomic” — or instantaneous — settlement of payments for various types of financial transactions, according to the statement. That would help banks overcome challenges presented by the current standard sequential method of processing global payments.”

Even in the digital era, cross-border payments are at times cumbersome and slow, which is a challenge the blockchain-enabled platform intends to solve.

According to Sopnendu Mohanty, the chief fintech officer at the Monetary Authority of Singapore:

“The launch of Partior is a global watershed moment for digital currencies, marking a move from pilots and experimentations toward commercialization and live adoption.”

In the future, the blockchain-powered platform is expected to be designed to complement the ongoing central bank digital currency (CBDC) initiatives.

JPMorgan is continuously being involved in the crypto/blockchain space. For instance, the top American bank established an investment “basket” linked to eleven crypto-focused companies like Nvidia, Square, and MicroStrategy last month.

The debt instrument will enable investors to have direct exposure to a basket of more firms, such as PayPal, Advanced Micro Devices, Taiwan Semiconductor Company, Intercontinental Exchange, CME Group, Overstock.com, and Silvergate Capital.

This new financial product is expected to allow institutional investors to gain exposure to the cryptocurrency market without actually holding digital assets directly.

China expands digital yuan usage for cross-border trade

China is expanding the use cases for its central bank digital currency (CBDC), the digital yuan, also known as e-CNY, to promote cross-border trade in its Belt and Road initiative. The digital yuan was one of the first CBDCs to be developed and widely tested, with the government having expanded its testing parameter to include multiple cities and millions of people.

Xuzhou, a trade hub in Jiangsu province, plans to promote the use of e-CNY to pay for services and storage charges for goods carried by cross-border trains, according to a plan promoting the use of the Chinese digital currency in cross-border trade that was issued in the city. There are 18 regular cross-border rail connections from Xuzhou to 21 nations in Asia and Europe, making it an ideal location to pilot the use of e-CNY in cross-border payments.

The Hong Kong Monetary Authority (HKMA) is also testing the digital yuan as a cross-border payment tool in the Guangdong-Hong Kong-Macau Greater Bay Area. “The HKMA is working with mainland’s central bank, the People’s Bank of China, to test the digital yuan as a cross-border payment tool in Hong Kong,” said HKMA deputy chief executive Darryl Chan. The Chinese government hopes to improve efficiency and reduce the cost of cross-border transactions with these pilot projects.

Jiangsu province has been proactive in promoting digital yuan use cases, with Changshu, another city in the province, announcing that it will pay civil servants and people who work for public institutions using digital yuan. The Chinese government has ramped up its CBDC efforts at a time when the international trade markets are moving away from the standard U.S. dollar. Recently, China has completed multiple trade treaties with the likes of Russia and India based on their national currency over the U.S. dollar.

While the digital yuan has not yet been officially launched, the government’s efforts to test and expand its usage suggest that it is moving closer to a launch. The expansion of the digital yuan’s use cases for cross-border trade is part of a broader trend towards the digitalization of currencies, with other countries also exploring the use of CBDCs. China’s efforts in this area may give it a competitive advantage in the international trade markets, particularly as countries seek to diversify away from the U.S. dollar.

In addition to its use in cross-border trade, the digital yuan may also have implications for domestic payments in China. The Chinese government plans to use the digital yuan to reduce its dependence on the traditional banking system and to increase financial inclusion for those who are currently unbanked. The success of the digital yuan could also help China to expand its economic influence in the Asia-Pacific region and beyond, as other countries adopt its use in cross-border trade and potentially even domestic payments.