Blockchain Inter-Bank Settlement System to be Tested in Japan
The trail, which will implement distributed ledger technology product from Fujitsu, will include nine Japanese banks.
Several Japanese financial institutions have joined forces with the country’s multinational tech giant Fujitsu to examine whether blockchain can improve the inter-bank settlement system. Fujitsu will be the application development vendor in an upcoming test of distributed ledger technology (DLT) solutions for small-scale transactions, according to the Fujitsu’s press release from Monday.
The Japanese Banks’ Payment Clearing Network (Zengin – net.) will conduct the trial’s transactions with the participation of nine banks: Mizuho Bank, MUFG Bank, Sumitomo Mitsui Banking Corporation, Resona Bank, the Joyo Bank, the Bank of Fukuoka, the Nishi-Nippon City Bank, Sumitomo Mitsui Trust Bank, and the Keiyo Bank. The trial, which date is unclear, will use distributed ledger technology (DLT) solutions from Fujitsu as the tech corporation will build a blockchain-based settlement system for the test.
Fujitsu will also implement solutions from its peer-to-peer (P2P) money transfer service. The financial experiment hosting place will be Japanese Bankers Association’s (JBA) Collaborative Blockchain Platform, which has already collaborated with the tech giant.
“This field trial […] will use a dedicated “digital currency” for interbank settlements to evaluate the functionality of the system as an economical new interbank funds transfer settlement system for small-scale transactions using a real time gross settlement (RTGS) method,” Fujitsu explained in its press release.
“The participants will also use the trial to confirm the viability of blockchain technology in this context.”
RTGS is a financial method that reduces payment risk as individual transfer instructions are settled one by one, in gross, while the so-called dedicated virtual currency will be based on a fixed rate of 1 unit=1 yen.
Blockchain, the technology that underpins cryptocurrencies including Bitcoin (BTC), Ethereum (ETH), and XRP (XRP), has become attractive to various industries in a search for new tech solutions that can bring cost savings, transparency, and time-efficiency. Several leading players including Ripple, the body behind XRP coin, as well as R3 Corda and Hyperledger, target banks with DLT-based settlement products.