Real-time global payments solution on R3’s Corda
by Bija Knowles
Blockchain software firm R3 has announced that, together with 22 of its member banks, it has developed a cross-border payments platform based on distributed ledger technology (DLT) and is due to release the prototype by the end of 2017.
R3's CEO, David Rutter, said: “International payments systems have struggled to keep pace with the explosion of global trade and the globalisation of the world’s markets. This marks a significant milestone for distributed ledger technology as we work alongside our bank members to harness its unique attributes to build the world’s first true international payments system. This solution will be a game-changer for any bank or company whose business relies on making or receiving cross-border payments, and is a key part of R3’s wider strategy to leverage distributed ledger technology for faster and more efficient execution of all types of financial transaction”
Built on the Corda platform, the solution creates a “representation of fiat currencies on ledger” and is programmed to enable interaction with central bank digital currencies as they are rolled out, explains R3. The aim of the solution is to improve the process of international transactions, which R3 calls “extremely inefficient, expensive and slow”. The banks involved in the initiative include Barclays, BBVA, CIBC, Commerzbank, DNB, HSBC, Intesa, KBC, KB Kookmin Bank, KEB Hana Bank, Natixis, Shinhan Bank, TD Bank, U.S. Bank and Woori Bank.
How could DLT disrupt global payments?
R3's solution is not the only DLT-based attempt to solve the problem of international payments. Other projects that could disrupt the status quo of global transactions via the correspondent banking network include:
Last month Ripple announced that more than 100 financial institutions have joined its enterprise blockchain network, RippleNet, which aims to “definitively modernise global payments” using blockchain.
SWIFT's Global Payments Innovation (GPI) initiative
This is the global banking organisation's initiative to develop technology to improve global payments. Last month it published a report on how blockchain technology could potentially improve real-time nostro reconciliation as part of the GPI initiative. It began its DLT proof of concept in April this year and is due to share the final report in December. For more info on GPI see: 22 additional global banks join Nostro a/cs SWIFT gpi blockchain proof of concept
The utility settlement coin
This is a digital currency project that was initiated by UBS and Clearmatics Technology in 2015. The digital coins are stored on distributed ledger technology and can be converted into different currencies, speeding up back-office settlement processes for banks, and also helping them to buy securities, such as bonds or equities, without having to wait for traditional payments to be settled. CTMfile wrote about it here: Global banks step closer to creating new digital settlement currency
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