R3 builds DLT international payments solution
Written by Chris Lemmon
R3 and 22 of its member banks have developed a solution that leverages distributed ledger technology (DLT) to enable efficient and cost-effective cross-border payments.
While many DLT initiatives have experimented with specific use cases within international payments, R3 is the first to develop a shared infrastructure – built on its Corda platform – to facilitate the full payments workflow.
The solution works by creating a representation of fiat currencies on ledger, and is programmed to enable interaction with central bank digital currencies as they are rolled out.
Domestic payment systems have advanced in many countries to the point of providing real-time funds transfer for customers, highlighting by contrast the extremely inefficient, expensive and slow experience businesses encounter with international payments.
The solution will improve world trade efficiencies by facilitating instant international payments. It offers a direct alternative to current systems that can take days to complete an international payment, costing businesses millions, slowing down trade, increasing settlement and fraud risks and causing a liquidity drain for banks.
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.
David Rutter, CEO of R3, commented: “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-order 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.”
The prototype will be released by the end of 2017.