Four banks are teaming up to bring a blockchain inspired clearance and settlement system for worldwide transactions. BNY Mellon, Deutsche Bank, Santander and UBS believe they can launch a commercial blockchain by 2018. The banks work with a blockchain startup called Clearmatics. The Financial Times ‘ Martin Arnold reports : “The utility settlement coin, based on a solution developed by Clearmatics Technologies, aims to let financial institutions pay for securities, such as bonds and equities, without waiting for traditional money transfers to be completed. Instead, they would use digital coins that are directly convertible into cash at central banks, cutting the time and cost of post-trade settlement and clearing.” The banks have partnered in a larger blockchain project in the form of R3, which brings the world’s largest financial institutions together to discuss distributed finance. BNY Mellow believes the blockchain has the potential to “dramatically enhance the payments experience.” The bank believes the blockchain could remake finance. “The blockchain’s transparency could effectively allow the number of participants that need to be involved in the transaction process to be drastically reduced, cutting down the number of stages involved in a payment and thereby significantly enhancing efficiency,” the bank states on its website. “A number of banks are exploring ways in which blockchain technology could be used to streamline the current correspondent banking process (which requires payments to go through a number of banks), with the belief that, eventually, the blockchain may supersede this traditional transaction model. Indeed, non-bank institution Earthport, for instance, already has a solution for low-value cross-border payments using a distributed ledger network.” Deutsche Bank believes that blockchain has “great potential” and “could transform” the business model of many segments of the financial services industry and other industries. “It could also change the role of service providers by […]
