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Cryptocurrencies

R3 and banks complete blockchain test for cross-border payments

Friday 21 October 2016 | 11:22 AM CET

R3, a US-based financial innovation startup, along with 12 global banks, have completed the test of a cross-border payment system powered by blockchain technology.

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

R3 is leading a consortium of more than 60 of the world's largest financial institutions created to develop commercial applications of blockchain technology for the financial services industry.

The technology behind the test was developed by financial technology company Ripple. The company said in a statement that R3 and 12 of its member banks used Ripple's XRP currency in a cross-border transaction to enhance liquidity in real time, creating savings as much as 60 percent of the liquidity cost in cross-border payments.

In cross-border transactions, banks typically provide liquidity for payments by holding various currencies in local or correspondent bank accounts around the world, known as "nostro accounts." Holding various currencies across many accounts is costly, Ripple said, because banks have to fund those accounts.

In the cross-border test, banks used the XRP currency to form part of the liquidity needed in nostro accounts, instead of the actual currencies needed for the payment. Ripple's XRP can be converted into traditional currencies.

The trial demonstrated that Ripple's technology could enable banks to make markets for fiat currencies such as dollars and euros using XRP and then complete authenticated payments in real time without multiple "nostro" accounts.

More: Link
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