Banking Blockchain Consortium R3 Tests Interbank Cross-Border Payments With Ripple

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Financial innovation company R3 and twelve of its consortium member banks have trialed Ripple’s distributed financial technology and the potential for its digital asset to scale liquidity and reduce the costs and inefficiencies of interbank cross-border payments.

Banks traditionally provision liquidity for cross-border payments by holding various currencies in local bank accounts around the world, known as nostro accounts. The practice of holding various currencies across many accounts is costly because banks have to fund those accounts, trapping capital. The emergence of digital assets offers an alternative to this process.

Andrew Irvine, Head of Canadian Commercial Banking and Partnerships, BMO Bank of Montreal, said:

“This technology will be a catalyst in reducing complexity, streamlining processes and ultimately lowering the significant costs associated with interbank cross-border payments, which will benefit both banks and their customers in the years ahead.”

Phil Griffiths, Senior Vice-President, Global Transaction Banking, CIBC, added:

“A more efficient global payment system is all about making payments faster, easier, and more transparent for businesses and consumers. Using innovative technology to rethink traditional processes is exactly what’s needed to give businesses everywhere an easier way to send and receive payments, and we are very active in making that a reality for our clients.”

Digital assets can enable near real-time value exchange anywhere in the world, providing liquidity on demand and reducing associated costs. Of the popular digital assets today, XRP boasts the fastest settlement speed, settling in about five seconds or less. This trial introduced XRP to test the feasibility of reducing or retiring the use of current nostro accounts for local currency payouts.

The trial demonstrated that the Ripple network could enable banks to make markets for fiat currencies using XRP and then complete authenticated payments without multiple nostro accounts. Through a series of transactions, the participating banks explored how Ripple’s solution and XRP could enable both cost-cutting opportunities and revenue opportunities.

The trial was carried out over the Ripple network in R3’s Lab and Research Centre, which has quickly become a center of gravity for collaborative research and testing of distributed and shared-ledger inspired technologies.

R3 member banks involved in the trial include Barclays, BMO Financial Group, CIBC, Intesa Sanpaolo, Macquarie Group, National Australia Bank (NAB), Natixis, Nordea, Royal Bank of Canada (RBC), Santander, Scotiabank, and Westpac Banking Corporation.

David Rutter, CEO of R3, commented:

“The tradition of holding numerous currencies across multiple accounts in different countries is costly and inefficient. This is a legacy issue from a time when the technology did not exist to offer a viable alternative, however digital assets and distributed ledgers can now enable real-time exchange of currencies between parties anywhere in the world without the need for a third party intermediary. This prototype paves the way for a major overhaul of how banks process and settle cross-border payments.”

 

 

Carolyn Burke, Head, Regulatory Payments, RBC said:

“Trial projects like this and the knowledge we gain from them are helping us build a path for the future of payments and deepen the industry’s knowledge on the potential Blockchain may have for better payments management worldwide.”

Mike Baldwin, Head of Transactional Solutions, GTS, Westpac Institutional Bank, commented:

 “Combining the use of digital currency on a shared ledger with our previous low-value, cross-border payment proofs of concept holds great promise for transformation across the entire international payments value chain as well as for financial inclusion.”

R3 is leading a consortium with over 60 of the world’s largest financial institutions to develop ground-breaking commercial applications for the financial services industry that leverage the appropriate elements of distributed and shared ledger technology.

Operating in New York, London and San Francisco, the R3 team is made up of financial industry veterans, technologists, and new tech entrepreneurs, bringing together expertise from electronic financial markets, cryptography and digital currencies.

The R3 Lab and Research Centre has quickly become a centre of gravity for collaborative research and testing of distributed and shared-ledger inspired technologies, and is where R3 works with its partners to define, design and deliver the next generation of financial infrastructure.

Ripple provides global financial settlement solutions to ultimately enable the world to exchange value like it already exchanges information – giving rise to an Internet of Value (IoV). Ripple solutions lower the total cost of settlement by enabling banks to transact directly and with real-time certainty, optionally using the digital asset XRP to further reduce liquidity costs. Banks around the world are partnering with Ripple to improve their cross-border payment offerings, and to join its growing, global network of financial institutions and liquidity providers.

Ripple is a venture-backed startup with offices in San Francisco, New York, London, Sydney and Luxembourg. As an industry advocate for the Internet of Value, Ripple sits on the Federal Reserve’s Faster Payments Task Force Steering Committee and co-chairs the W3C’s Web Payments Working Group.

About Richard Kastelein

Founder of industry publication Blockchain News, partner at ICO services collective CryptoAsset Design Group (helped raise over $200m+), director of education company Blockchain Partners (Oracle Partner) and ICO event organiser at leading industry event  CryptoFinancing (first ICO event in Europe) – Richard Kastelein is an award-winning publisher, innovation executive and entrepreneur. He sits on the advisory boards of half a dozen Blockchain startups and has written over 1200 articles on Blockchain technology and startups at Blockchain News and has also published pioneering articles on ICOs in Harvard Business Review and Venturebeat.
 
Kastelein has spoken (keynotes & panels) on Blockchain technology in Amsterdam, Antwerp, Barcelona, Beijing, Brussels, Bucharest, Dubai, Eindhoven, Gdansk, Groningen, the Hague, Helsinki, London, Manchester, Minsk, Nairobi, Nanchang, San Mateo, Shanghai,Tel Aviv and Venice. His network is global and extensive.
 
He is a Canadian (Dutch/Irish/English/Métis) whose writing career has ranged from the Canadian Native Press (Arctic) to the Caribbean & Europe. He’s written occasionally for Harvard Business Review, Wired, Venturebeat, The Guardian and Virgin.com and his work and ideas have been translated into Dutch, Greek, Polish, German and French.
 
A journalist by trade, an entrepreneur and adventurer at heart, Kastelein’s professional career has ranged from political publishing to TV technology, boatbuilding to judging startups, skippering yachts to marketing and more as he’s travelled for nearly 30 years as a Canadian expatriate living around the world.
 
In his 20s, he sailed around the world on small yachts and wrote a series of travel articles called, “The Hitchhiker’s Guide to the Seas’ travelling by hitching rides on yachts (1989) in major travel and yachting publications. He currently lives in Groningen, Netherlands where he’s raising three teenage daughters with his wife and sailing partner, Wieke Beenen.

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