Major banks see breakthrough on transacting using blockchain

Out-Law News | 22 Jan 2016 | 5:05 pm | 1 min. read

Some of the world's biggest banks have tested using blockchain technology to process payments without the involvement of a central clearing house, according to the financial technology company that facilitated the test.

R3 said that 11 banks had connected to a "private peer-to-peer distributed ledger" it manages and had "simulated exchanging value, represented by tokenised assets on the distributed ledger without the need for a centralised third party".

The banks involved in the simulation were Barclays, BMO Financial Group, Credit Suisse, Commonwealth Bank of Australia, HSBC, Natixis, Royal Bank of Scotland, TD Bank, UBS, UniCredit and Wells Fargo.

R3 described the test as "a major step forward for the application of distributed ledger technology" across the financial services sector.

David Rutter, R3 chief executive, said: "The transition from vision and hypothesis to application and execution signifies the next major step towards using this technology to transform how institutions interact, report and trade with each other in financial markets. This is a very exciting development, both for R3 and our member banks, as well as the global financial services industry as a whole."

The 11 banks that participated in the simulation are among a total of 42 financial institutions working with R3 to explore the potential of blockchain technology. At the launch of the initiative, R3 said participating companies would be involved in collaborating on how to use "shared ledger solutions to meet banking requirements for security, reliability, performance, scalability, and audit".

R3 said the test exercise was "the first in a series of projects, using a range of candidate distributed ledger technologies" and was "designed to prove suitability of distributed ledgers for financial markets use cases". It said it will announce additional projects later this year.