Blockchain Letter Of Credit €“ European Practices In International Context

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.