Moscow Credit Bank (MCB) has announced the issuance
Moscow Credit Bank (MCB) has announced the issuance of a blockchain-based bank guarantee denominated in Chinese yuan, which it claims to be the first of its kind in Russia. The guarantee, worth over CNY 100m (approx. $144,600), was executed on the Masterchain blockchain platform, the national blockchain network for transferring digital assets between participants. The transaction was conducted on-chain, allowing the beneficiary to receive the bank guarantee without having to wait for a paper version and to verify its authenticity with the bank.
Bank guarantees, a financial safeguard offered by lending institutions, assure the financial responsibility of a specific transaction if a customer fails to fulfil its obligations. Such guarantees are frequently used in international trade to ensure that payment is made or goods are delivered as agreed. On the Masterchain blockchain platform, a ready-made bank guarantee is displayed, which is agreed upon by three parties, making it impossible to fake or lose.
The yuan is the currency of the bank guarantee, reflecting the fact that most foreign trade contracts are serviced in Chinese currency, according to Natalya Bahova, director of the MCB's International and Structured Finance Department. If a payment is made under the guarantee, the beneficiary will receive Russian rubles at the exchange rate agreed by the parties. Bahova stated that the decision to issue a blockchain-based bank guarantee in Chinese yuan is a logical step for the market, which will witness more such examples in the near future, especially for large groups of companies with many subsidiaries that accept bank guarantees in large quantities and on a regular basis.
The issuance of the blockchain-based bank guarantee comes amid ongoing crypto developments in Russia, with the country's central bank preparing to launch the first consumer pilot for its central bank digital currency (CBDC) on April 1, 2023. The digital ruble transactions will be conducted by 13 local banks and several merchants. The CBDC pilot was initially scheduled for 2024 but was moved to an earlier date as the Russian central bank sought SWIFT alternatives in light of Western economic sanctions.