China’s state-owned commercial bank, Bank of Communications (BoCom), has issued $1.3 billion of residential mortgage-backed securities (RMBSs) using its proprietary blockchain based network.
According to recent stats by S&P Global is the fifth largest bank in China. The bank has developed an independent platform called Juicai China to issue the RMBS worth of 9.3 billion yuan. Juicai China was launched in June this year and in July the process of issuing digital RMBS has started. This is the first time that a bank has issued the residential mortgage-backed securities which are based on blockchain technology.
Agricultural Bank of China, the fourth largest bank of China has also issued loan worth of $300,000 based on blockchain technology in July. Commonwealth Bank of Australia used blockchain technology to ship 17 tons of almonds. Blockchain technology guarantees a greater level of efficiency and transparency for authentication of the goods, condition, and tracking location. The subsidiary of Ping An Insurance Company of China Ltd., OneConnect Financial Technology Co. Ltd. has also announced the launch of Asset-Backed Securities (ABS) platform, ALFA intelligent. Organisations around the world are using blockchain technology to improve the transparency and efficiency.
BoCom was the main issuer with China International Capital Corporation as lead underwriter and book runner for the offering. Other co-underwriters pf the offerings were China Merchants Bank and the Industrial and Commercial Bank of China.
Benefits of using blockchain technology
Use of blockchain technology will bring several distinct advantages over conventional solutions. With the help of blockchain technology, all parties which are participating in the loan will be able to manage cash flow effectively, track assets, and perform other business operations. Blockchain technology will also reduce the risks, shorten the RMBS issuance time, and ensure the authenticity of the assets. The digital mortgage base of Bank of Communication will be available for intermediaries such as multinational law firm Zhonglun, global consulting company PricewaterhouseCoopers and others.
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