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Blockchain Letter Of Credit €“ European Practices In International Context

Author

Listed:
  • Claudia Gabriela Baicu
Abstract
Traditionally, payments in international trade are performed through documentary letters of credit, which has well-established techniques and mechanisms. The letter of credit provides security for both exporters and importers while benefitting from the uniform regulation of the International Chamber of Commerce in Paris. However, one of the biggest disadvantages of letter of credit is that it is still based on physical documents, with negative effects on the efficiency of operations. As a result, various ways to improve international payments are currently being investigated, including through the use of blockchain technology. This article explores the practices of documentary letter of credit conducted on blockchain platforms. The results of the research reveal that banks promote such solutions, setting up a number of international networks for this purpose. The digital letter of credit has advantages in terms of increased efficiency, transparency and safety, but faces some challenges affecting its widespread use.

Suggested Citation

  • Claudia Gabriela Baicu, 2023. "Blockchain Letter Of Credit €“ European Practices In International Context," Euroinfo, Institute for World Economy, Romanian Academy, vol. 7(4), pages 40-56, September.
    • Handle: RePEc:iem:eurinf:v:7:y:2023:i:4:p:40-56
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    File URL: https://iem.ro/rem/index.php/euroinfo/article/view/880/964
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    More about this item

    Keywords

    documentary letter of credit; digitization; blockchain technology; smart contract; electronic documents;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System

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