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LCs: An outdated concept?

The shift to open account trade continues to raise question marks over the future and relevance of traditional letters of credit (LCs).

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Comments (1)

  • Tat Yeen Yap
    Tat Yeen Yap, Societe Generale 20 November 2017

    I agree that digitisation is key to rooting out the inefficiencies of the letter of credit. But it has less to do with data over documents, but more with the quickness of presentation and re-presentation. BPO was a stab at fully digitising the transactions between banks, but ignores the fact that the buyer and seller still need documents. The discussion today seems to take the view that data is king and if we could just transact on data, we solve a major problem. Guess what: what we need are digital documents, not data alone. Documents contain data, but bits of data do not make a document. Perhaps use of blockchain may remove the need for documents.. we will see...

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