The Argument for Stripped Down LCs
Have commercial credits become so burdensome and unwieldy that a trimmed down version of the rules governing their practice could streamline the LC process? Could simplified rules and practices perhaps even spark increased use of this traditional (some say aging) trade product?
Voiced at ICC’s October Technical Meeting in Tbilisi, the idea of creating a simplified UCP sparked enough interest that the notion will be explored further at the Banking Commission’s April meeting in Beijing. One major question is whether there is a sensible business case to develop a “lite” version of UCP600. Whether the idea will gain sufficient traction is unclear, particularly given ICC’s commitment to prioritizing the e-compatibility of practice rules and the inevitable challenges of satisfying the interests of LC stakeholders across diverse markets and regions.
Another Appearance of "LC Lite"
Coincidentally, another LC “lite” is in the news. LC LITE is a project focused on developing an efficient and cost-effective digital letter of credit that will be embraced by importers and exporters. Those behind the project foresee that trade contracts, LC contracts, underlying trade documents, and related payments execution could be consumed within LC LITE’s token and smart contracts. Coinsilium, a blockchain venture builder, recently announced its partnership with LC LITE to support the project’s efforts.
For more on the noteworthy takeaways from the ICC Meeting in Tbilisi, as well as the developing story of stripped down LCs and rules, look out for the year end double issue of Documentary Credit World.