New players, from countries outside the OECD Arrangement are increasingly challenging OECD member countries bound by regulations. EKN recently held a seminar on the subject.
1. What is blockchain?
“Blockchain is a technology that allows information to be shared simultaneously, by all who are connected to the system. Instead of everyone having their own database to manage and update, you share a common database. This means that everyone has the same – correct – information at any given time. New information that is entered into the system forms a block that is connected to the preceding block using an encrypted code. Using this method, all transactions are transparent and traceable.”
2. How can blockchain make international trade simpler?
“Exporting today involves a range of administrative tasks. Instead of managing invoices and logistics manually, a company that works with blockchain can reduce manual management activity. As soon as a company issues an invoice and receives a trade receivable, the accounts payable item is recorded with the recipient. This is achieved entirely without handling the claim between the companies. The invoice is given a unique crypto code that is automatically matched in the system with the recipient using a cryptographic key.”
3. How can blockchain make international trade more secure?
“The logistics surrounding goods are also facilitated. Everyone can track the location of the goods in real time. It is also possible to add automatic payments that are linked to various events in a business transaction, such as when the goods have arrived or are collected. Fewer intermediaries and automation provide a more efficient – and more secure – workflow that is cheaper for everyone involved. This also improves the ability to link performance to counter-performance, such as payment.”
4. In what way does blockchain reduce the risk of fraud?
“Blockchain technology means that historical data cannot be deleted. It is only possible to add information, but not to delete data. This complicates all forms of fraud and makes it possible to easily verify information and thus be able to trust the opposite party. Transactions become more secure when information is more difficult to manipulate. This means that everyone who participates in a supply chain has much to gain from blockchain technology.”
5. Is it already possible to use blockchain today?
“It is estimated that around 30 per cent of Europe’s small and medium-sized enterprises will have access to the blockchain system that we at Nordea are now rolling out in Europe, together with eleven other European banks. These companies can use blockchain in transactions with customers who are also in the system. They will also be able to search for new business partners on the platform. At present, it is only possible to utilise blockchain for European trade, although Asia will be next to connect to the platform. Services and products intended to facilitate trade will be continuously developed on the platform.”
6. How are banks affected by blockchain with regard to international trade?
“As with the exporting companies, the banks’ administration is also reduced. This makes it possible to cost-effectively offer risk coverage and financing to customers for smaller transaction amounts. Blockchain enables transparent and worldwide cooperation in real terms, in a secure cooperation format.”