About the Task ForceICC Russia Task Force on the Use of Blockchain in Trade Finance
Background and Purpose
Governance and Membership
Key interactions & Relationship building
1/ Background and Purpose
Trade finance currently requires from the engaged banks and corporates manual processing of large volumes of paper documents and entering the same data into multiple different systems. This is due to the lack of systems that carry out end-to-end business process that involves fully automated operations. Routine operations make trade finance very time-consuming owing to the existing level of automation, which also implies sufficient risks.
Meanwhile, the digitalisation progressing today in economy in general and in the banking sphere in particular, which includes development of Distributed Ledger Technology (DLT), the Internet of Things (IOT), neurotechnologies and Artificial Intelligence (AI), makes it possible to focus on creating an electronic workflow platform with the broadest outreach of participants and trade finance deals. According to many experts, this task can be accomplished today in the timeliest and greenest manner on the basis of blockchain.
Implementation of electronic workflow and end-to-end blockchain-based business processes, conducted for the purpose of trade development, can greatly benefit banks and their clients, namely reduce the cost of using documentary instruments and guarantees, as well as make trade finance mechanism available and responding to the needs of SMEs.
Notwithstanding the above, there is a number of constraints to the wider adoption of digitalised trade, which have been identified as:
- inability of the Russian legal framework to meet the needs of digital economy development and the use of digital blockchain-based trade finance instruments;
- lack or shortage of uniform rules and standards, necessary for the complex and safe implementation of digital technologies in current business processes and the following transition of the latter into the digital environment;
- limited recognition of the legal status of electronic documents;
- ambiguity of legislation on cryptography;
- challenges of cross-border electronic workflow, including problems with national legislations in different countries, regulatory authorities, cryptographies, service providers;
- insufficient maturity and efficiency of blockchain technology in Russia and the world;
- insufficient maturity and efficiency of information security technologies in Russia and the world;
- difficulties in adoption end-to-end technological solutions by a large number of stakeholders in the supply chain, in particular due to the lack of a joint blockchain platform at the national and international level;
- unwillingness on the part of many market participants to transition from the customary paper-based workflow to digital relationships and sustain high rates of implementation of new technologies.
The newly created Task Force is to become the coordination body on all work of the ICС Russia Banking Commission related to applying blockchain in trade finance.
The Mission of the Task Force is creating favorable conditions to identify and lift restrictions in terms of blockchain application in trade finance and documentary business, assisting in the development of legal regulation of this process and safe transition to the digital environment.
The objectives of the Task Force are the following:
- In-depth study of the international experience in applying blockchain in trade finance and guarantee business, fostering the expansion of its field of application;
- Participation in international polls, discussions and strategic sessions on applying blockchain in trade finance and guarantee business, as well as launching and holding experience sharing events;
- Monitoring development and practical use of blockchain in Russian pilot projects, identifying major constraints to further development of the technology;
- Studying the legal base related to electronic workflow, application of automated systems, cryptography and communication channels;
- Studying the legislative regulation of cryptocurrencies;
- Studying the use of crypto assets in trade finance;
- Drafting legislative initiatives to give legal status to the applied technological solutions;
- Contributing to determining the legal status of electronic documents in trade, particularly in order to authenticate them, as well as to transfer ownership by means of digital tools;
- Assessment of the need to amend existing regulations of the Banking Commission in order to facilitate the process and promotion of trade digitalisation;
- Coordinating the work of Russian participants of foreign economic activity, including financial institutions, IT companies and government authorities regarding the development and implementation of blockchain in international trade finance and guarantee business transactions;
- Assessment of the emerging pilot blockchain-based trade finance projects and provision of advisory support;
- Identifying major constraints to blockchain development and suggesting solutions for their elimination, developing standards for applying blockchain in trade finance and guarantee business within the framework of Russian jurisdiction.
3/ Governance and Membership
The Task Force is chaired by Tatiana Ivashkova, Head of Documentary Operations Department at Raiffeisenbank.
The Russian National Committee of the International Chamber of Commerce will contribute to the work of the Task Force and implementation of its projects.
The Chair of the Task Force, in conjunction with the Committee, will be responsible for the appointment of the Task Force members. Banking and other experts may be invited to participate in the Task Force if they comply with the following selection criteria:
- Strong expertise in the areas covered by the Task Torce;
- Availability to actively participate in the activities of the Task Force;
- Institutional support granted to each candidate by his/her institution to participate in all group activities (conference calls, meetings, etc.)
- Ability to mobilize support within the industry, command respect and communicate outcomes of the projects to targeted audiences.
4/ Key interactions & Relationship building
The Task Force will conduct its work both in Russia and internationally. The Task Force will act as the coordination body on all work of the ICС Russia Banking Commission related to applying blockchain in trade finance and guarantee business. The Task Force will also engage and coordinate with competent industry bodies, global corporations, technological consortia and government regulators.