The bank of china just issued 20 billion yuan ($2.8 billion) worth of bonds through its proprietary blockchain system for financing small and medium micro-enterprises to support the development of the economy. This is according to a report that was done by Sina Finance in early December.
This is not the first time for Bank of China to support SME’s as at the end of September, it spent up to 404 billion yuan ($57.7 billion) in up to 410,000 SME’s.
Bank of China is owned by the state and is the fourth-largest commercial bank in the country. It developed a blockchain system to support functions such as bond creation, bond purchase, bookkeeping, underwriting, order summary, pricing, placement, and network management.
The issuance of bonds was in a plight to boost the Chinese economy by giving support to micro and small businesses. Currently, China has the highest outstanding loan for small enterprises in Asia. It is due to this reason that the Chinese policymakers had to work on the monetary policy to help small businesses.
Since the endorsement of President Xi Jinping to adopt blockchain technology, the trend has changed in China. With the endorsement, the country is using blockchain to change most of its industries. That explains why China is leading in Blockchain patent application. There are many blockchain projects that China is working on and may dominate the market soon. In November, the Bank of China introduced insurance blockchain. BoC is working with partners such as IBM to find ways of integrating AI, blockchain, and IoT to increase efficiency.
BoC uses the blockchain forfeiting transaction (BCFT) platform and as per three months ago, the platform has processed up to $2.8 billion of trades.
The people’s Bank of China is working on launching a digital token to overtake the US dollar. It is currently planning to do a real-world test of its digital currency. It will also support other major participants such as China Telecom to test digital currency payments.
The rate of China blockchain development is speculated to increase by 66% in 5 years from 2018 to 2023.
The use of blockchain to offer bonds is not a new concept as it has been used by the World Bank and Spanish bank BBVA before.
The Ethereum blockchain has also been used to issue bonds. Banco Santander used the platform to issue a tokenized $20 million bond.
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