R3 Corda distributed ledger platform will support digital currencies

Corda, a distributed ledger platform designed from the ground up to record, manage and synchronise financial agreements between regulated financial institutions, was used by R3 and over 15 of its consortium member banks to successfully complete two prototypes that demonstrate how distributed ledger technology can address the key challenges facing the USD 45 billion global trade finance industry.

Corda, which was announced in April 2016, is built on industry-standard tools, supports a variety of consensus mechanisms and just now was confirmed that it will support both existing fiat currencies and digital currencies.

The banks designed and used smart contracts (self-executing transaction agreements) on the platform to process accounts receivable (AR) purchase transactions, also known as invoice financing or factoring, and letter of credit (LOC) transactions.

According to the spokesperson reporting to the source, the prototypes produced findings that can be rolled into new products some of which could be ready for production and use in 2017.

Moreover, they will be available to all interested users and not just for the member banks that participated in the trial: Barclays, BBVA, BNP Paribas, Commonwealth Bank of Australia, Danske Bank, ING Bank, Intesa Sanpaolo, Natixis, Nordea, Scotiabank, UBS, UniCredit, U.S. Bank and Wells Fargo.

Given that AR and LC transactions contain most of the essential elements of other trade finance transactions, both prototypes provided extremely valuable learnings that can be applied to the broad range of other transactions types.

Traditional processes surrounding trade finance are largely paper-based, time consuming and prone to risk and fraud. These inefficiencies undermine trade which is a significant source of revenue for banks. Hence, when used in trade finance, the scope of this technology is to reduce operational and compliance costs of paper-based trade financing by 10 to 15% and provide a platform for banks to grow revenues by as much as 15%.