Multiple banks around the globe are planning to build a blockchain-based settlement system by investing $50 million, according to a May 17 Reuters report.
Around a dozen banks are involved in this project and are planning to establish a joint entity called Fnality. However, the anonymous source of the publication could not reveal the identity of the banks.
Though the participants are aiming to launch the platform in 2020, the deal has not been finalized yet.
A similar project on the way
This is not the first blockchain-related project by a consortium of banks. In 2015, UBS Group AG and London-based technology startup Clearmatics proposed a similar clearing and settlement technology by leveraging blockchain to make the markets more efficient.
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Apart from UBS, the other banks participating in the project are Banco Santander, Bank of New York Mellon Corp, State Street Corp, Credit Suisse Group AG, Barclays PLC, HSBC Holdings Plc and Deutsche Bank AG.
Commenting on the progress of that project, a spokesperson from Barclays told Reuters: “We are a member of the USC Project and can confirm that the Research & Development phase is coming to an end.”
Blockchain has the potential to reshape the inefficient and expensive settlement process between banks. Companies like Ripple are developing bank-specific solutions to address the current settlement issues. The San Francisco-headquartered startup also partnered with more than a hundred banks across the globe to bring them into its network.
Earlier this year, Wall Street giant JP Morgan revealed that the bank is working on the development of its native digital currency called JPM Coin to enable instant transfers of payments between institutional accounts.
Meanwhile, the World Bank and Sydney-headquartered Commonwealth Bank have issued a bond on a private blockchain and also has enabled the facility to record all secondary market transaction data of that bond on a decentralized ledger.