According to the Shanghai Securities News on April 24, another major Chinese government department has launched a financial platform based on blockchain technology.
The State Administration of Foreign Exchange of China, SAFE is one of the crucial departments of China, is also recognized as a leading administrative department just as important as PBoC.
According to the official announcement, SAFE has jointly collaborated with a state-owned monopoly enterprise called ZhongChao Credit Card Industry Development Co., Ltd located in Hangzhou city on March and successfully built a Cross-Border financial trade service platform based on blockchain technology.
This is not the first time that the Chinese government creates a financial and trade-related blockchain platform.
In early September last year, PBoC has already launched its first trade finance blockchain platform, named Bay Area Trade Finance Blockchain Platform Project(BATFB).
And in 2019 February, the project as part of the Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area signified a new milestone with the full support of the Central Government.
Then, Why the Chinese government keeps going after the new way of Trade finance?
The answer is in those issues that we are facing with the traditional way of the process of trade finance.
1. Information Duplicate problems 2. Manual processing
Generally, financial institutions do not publicly disclose the information to each other in the process of trading. The work of the disclosure information is manually conducted by government departments or the central government itself.
Regardless of the size and area, most information has not been disclosed for decades. It is so obvious that we are facing the inconsistency of information and overlapping issues all the time.
And there are still many institutions and companies sticking to document-based systems when they conduct trade finance services. So the efficiency of operation is naturally falling down, and errors occurring from the manual modification by humans are more and more crucial. These issues are leading us to the financial risk and wasting of resource eventually.
The State Administration of Foreign Exchange of China treats the blockchain technology as their “troubleshooter” that can solve those problems that have bothered the industry so much for years.
According to the SAFE, on the basis of the “Receivable Financing” service, they will make it possible for companies to perform business operations using blockchain technology and the whole process of trade finance such as applying for a loan, modifying applications, getting Permission, will be all done on their blockchain platform at once.