South Africa’s Standard Bank is developing a limited private permission-based distributed ledger platform for foreign exchange (FX) payments and settlement.
The Johannesburg-based bank said its international settlements blockchain hosted on hyperledger fabric is set to go live in the second half of 2019.
The blockchain-driven system is expected to speed up the processing of international trades, FX payments and settlement. In addition, Standard Bank hopes to increase the transparency of transactions, as all documents will be available to each party in real time.
The bank also plans to connect its foreign currency trading app Shyft, to the blockchain platform.
Extension to Asia
Richard de Roos, head of foreign exchange for Standard Bank, said that the blockchain solution is likely to reduce the incidence of trade failure, while increasing regulatory transparency and improving the visibility of liquidity.
The visible and private permission-based nature of the ecosystem means that the platform cannot, for example, be used for money laundering.
“In other words, Standard Bank’s foreign exchange payments and settlement blockchain does not operate like a cryptocurrency, accessible to all,” added de Roos.
“Instead, since this is not a public blockchain, it can’t be used for anything other than legitimate, regulated and entirely transparent transactions involving Standard Bank clients.”
Initially, the solution will be used by the bank and its partner in Uganda, Stanbic Bank, along with third parties directly involved in trades.
Standard Bank also works with shareholder and banking partner the Industrial and Commercial Bank (ICBC) of China, so the permissioned blockchain can further be extended to that partnership.
De Roos confirmed that the bank and 20 of its franchises are currently negotiating with ICBC to extend the hub into Asia.
“Standard Bank working together with ICBC means that our private permission blockchain foreign exchange payments and settlement solution provides clients potential access to similar ecosystems around the world,” he added.