Jamal Al-Farouq Recently, a bank in Russia has become the first one to handle a banking assurance that was built with blockchain technology and was denominated in Chinese money. The bank also stated how useful it is to use these digital documents and that people are wanting to pay using yuan more and more nowadays.
MKB Breaks New Ground with First-Ever Digital Bank Guarantee in China!
Moscow Credit Bank or MKB used a special kind of technology called blockchain to issue the first digital bank guarantee in Russia. This digital guarantee was over 100 million Chinese yuan, which is a lot of money! The technology that MKB used was developed by the Central Bank of Russia and is known as Masterchain.
MKB announced in a statement that they will provide guarantees to importers. This guarantee is denominated in the same currency as their contracts. If they need to make a payment, they can receive Russian Rubles at an exchange rate decided by both parties.
Three people – the principal, guarantor bank and beneficiary – reached an agreement about a bank guarantee. The great thing about this is that because it’s digital, there’s no need to wait for a paper version or ask the bank to confirm if it is real or not since it can’t be faked or lost.
The bank guarantee is the first ever digital one that has been made in Chinese currency. People usually pay for what they buy with this type of money, and more and more people are using it. Natalya Bahova from MKB’s international department said that the demand for payments in yuan is going up.
An executive said that this is a good idea and he thinks other companies will start doing the same. They will make decisions about when to use bank guarantees for large groups that often need them.
Every year, Russian companies use almost 12 million dollars to double check if their bank guarantees are legitimate. Even after these checks, 0.5% of them turn out to be fake, which adds up to a risk of around 75 billion dollars.
Because the West put sanctions on Russia because of their invasion of Ukraine, Russia has been searching for new ways to lower their reliance on the US dollar and traditional banking. These could include other types of money like cryptocurrency, blockchain technologies or crypto payments – which would help them get around the sanctions.
At the beginning of 2023, Russia passed a law called “On Digital Financial Assets”. Over the last year, they have been working on laws to help protect cryptocurrencies like Bitcoin.
In December, a licensed company in Russia announced that they were doing the country’s first ever digital asset trade involving China’s yuan currency. Both countries are also currently developing their own official digital versions of their paper money.
Do you think Russia will use crypto-currencies and other types of money more often in the future? Please tell us what you think by writing your answer in the comments below.
